                           OFFICE OF THE ATTORNEY GENERAL

                                     State of California


                                    JOHN K. VAN DE KAMP

                                       Attorney General


                         ______________________________________

                  OPINION            :
                                     :          No. 88-702
                  of                 :
                                     :          SEPTEMBER 13, 1989
       JOHN K. VAN DE KAMP           :
           Attorney General          :
                                     :

        ANTHONY S. DaVIGO            :

        Deputy Attorney General      :

                                     :
______________________________________________________________________________

              THE COMMISSION ON STATE MANDATES has requested an opinion on the
following question:

                Does the Commission on State Mandates have the authority to reconsider a prior final
decision relating to the existence or nonexistence of state mandated costs?

                                         CONCLUSION

                The Commission on State Mandates does have the authority to reconsider a prior final
decision relating to the existence or nonexistence of state mandated costs, where the prior decision
was contrary to law.

                                           ANALYSIS

            Section 6 of article XIII B of the California Constitution, an initiative constitutional
amendment which became effective on July 1, 1980, provides:

               "Whenever the Legislature or any state agency mandates a new program or
       higher level of service on any local government, the state shall provide a subvention
       of funds to reimburse such local government for the costs of such program or
       increased level of service, except that the Legislature may, but need not, provide
       such subvention of funds for the following mandates:

               "(a)    Legislative mandates requested by the local agency affected;

               "(b) Legislation defining a new crime or changing an existing definition
       of a crime; or

              "(c) Legislative mandates enacted prior to January 1, 1975, or executive
       orders or regulations initially implementing legislation enacted prior to January 1,
       1975."

                                                 1.                                            88-702

In order to implement the provisions of section 6, supra, the Commission on State Mandates
("commission," post) was established on January 1, 1985. (Gov. Code, § 17525.)1 Its basic purpose
is to adjudicate claims filed by local agencies for costs incurred as a result of certain state mandated
programs. (See 68 Ops.Cal.Atty.Gen. 245 (1985).) Specifically, section 17551, subdivision (a),
provides:

               "The commission, pursuant to the provisions of this chapter, shall hear and
        decide upon a claim by a local agency or school district that the local agency or
        school district is entitled to be reimbursed by the state for costs mandated by the state
        as required by Section 6 of Article XIII B of the California Constitution."

                 The present inquiry is whether the commission is authorized to reconsider, pursuant
to its own motion, its determination in a prior case respecting the entitlement of a claimant (local
agency or school district) to reimbursement for state mandated costs. It is understood for purposes
of this discussion that the prior decision was duly rendered and has become final. Our attention has
been directed, for illustrative purposes, upon the interpretive clarification by the California Supreme
Court in County of Los Angeles v. State of California (1987) 43 Cal.3d 46, 56-57, providing a
limited definition of the phrase "new program or higher level of service" within the context of
section 6 of article XIII B of the California Constitution, supra. Specifically, it was decided that that
phrase does not include any incidental increase in local costs arising upon the enactment of a law
of general application. Consequently, there was no mandatory subvention for increased costs to
local agencies resulting from the legislative authorization for higher workers' compensation benefits.
As a result of this clarification, the commission may have reached different determinations with
respect to certain prior claims which it now wishes to reopen for consideration.

                In the absence of any specific statutory authority, an administrative agency has, as
a general rule, no power to grant a rehearing or otherwise to reconsider a previous final decision.
In 37 Ops.Cal.Atty.Gen. 133 (1961), we considered whether the California Unemployment
Insurance Appeals Board was authorized to set aside its decision and reopen a matter for the purpose
of receiving written argument or reevaluating the evidence and issuing a different decision. We
explained in part (id., at 134-135):

                "In 2 Ops.Cal.Atty.Gen. 442, 443, the specific question of the board's
        jurisdiction to review, rehear or reconsider formal decisions was discussed as
        follows:

                "`In cases such as this one, the jurisdiction of boards and agencies such as the
        California Employment Commission and its successor the California Unemployment
        Insurance Appeals Board, is special and limited. (Heap v. City of Los Angeles, 6
        Cal. (2d) 405; Peterson v. Civil Service Board, 67 Cal.App. 70; Krohn v. Board of
        Water and Power Com., 95 Cal.App. 289.) It would seem that if such an agency did
        not have the express power to grant a rehearing, it could not grant such a rehearing.


               "`The reason for this rule of law is well expressed in the case of Heap v. City
        of Los Angeles, supra, where the Court said:

               "`". . . But the rule stated above, that a civil service commission has no such
        power in the absence of express authorization, is sound and practical. If the power

   1
    Hereinafter, all unidentified section references are to the Government Code.

                                                   2.                                               88-702

       were admitted, what procedure would govern its exercise? Within what time would
       it have to be exercised; how many times could it be exercised? Could a subsequent
       commission reopen and reconsider an order of a prior commission? And if the
       commission could reconsider an order sustaining a discharge, could it reconsider an
       order having the opposite effect, thus retroactively holding a person unfit for his
       position? These and many other possible questions which might be raised
       demonstrate how unsafe and impracticable would be the view that a commission
       might upset its final orders at its pleasure, without limitations of time, or methods of
       procedure. . . ."'

              "`The rule and reason therefor is well supported by California authority.
       (Pacheco v. Clark, 44 Cal.App. (2d) 147; Olive Proration etc. Com. v. Agricultural
       etc. Com., 17 Cal. (2d) 204; Proud v. McGregor, 9 Cal. (2d) 178.) This office has
       adhered to the rule just set out in Opinions (NS 2192, NS 2192a and NS 2192b)
       addressed to the State Board of Equalization.'

               "It was concluded therein that the Unemployment Insurance Appeals Board
       has no jurisdiction to review, rehear or reconsider its formal decisions for the reasons
       stated above.

               "Again in 16 Ops.Cal.Atty.Gen. 214 at 215, this office stated:

               "`It appears to be the general rule that if the jurisdiction of an administrative
       board is purely statutory, it must look to its statute to ascertain whether its
       determinations may be reopened. (People v. Wemple (1895) 144 N.Y. 478, 39 N.E.
       397; State v. Brown (1923) 126 Wash. 175, 218 P. 9; Note (1941) 29 Geo. L. J. 878;
       Comment (1941) 29 Cal. L. Rev. 741). That this is the California rule is illustrated
       by the decision in Olive Proration Committee v. Agricultural Prorate Commission,
       (1941) 17 Cal.2d 204, 109 P.2d 918, wherein the court said, at page 209:

               "`". . . since all administrative actions must be grounded in statutory
       authority, in the absence of a provision allowing a commission to change its
       determination, courts have usually denied the right so to do."' (See also Cook v.Civil
       Service Commission (1911) 160 Cal. 589, 117 P. 662; Heap v. Los Angeles (1936)
       6 Cal.2d 405, 57 P.2d 1323; 1 Ops.Cal.Atty.Gen. 412, 417; 2 Ops.Cal.Atty.Gen. 442;
       3 Ops.Cal.Atty.Gen. 143, 144; 4 Ops.Cal.Atty.Gen. 34, 36; 9 Ops.Cal.Atty.Gen. 294,
       295.)"'"

                In 59 Ops.Cal.Atty.Gen. 123 (1976) we pointed to certain "narrow exceptions" to the
general rule. (Id. at 126-127.) For example, the rule would not apply where the Legislature intended
that the agency should exercise a continuing jurisdiction with power to reconsider its orders. As
stated by the court in Olive Proration etc. Com. v. Agric. etc. Com. (1941) 17 Cal.2d 204, 209:

              "Where orders which relate to what may be rather broadly defined as
       individual rights are concerned, the question whether the administrative agency may
       reverse a particular determination depends upon the kind of power exercised in
       making the order and the terms of the statute under which the power was exercised.
       As to the first factor, almost without exception, courts have held that the
       determination of an administrative agency as to the existence of a fact or status
       which is based upon a present or past group of facts, may not thereafter be altered or
       modified. (Muncy v. Hughes, 265 Ky. 588 [97 S. W. (2d) 546]; Little v. Board of
       Adjustment, 195 N. C. 793 [143 S. E. 827]; Lilienthal v. Wyandotte, 286 Mich. 604

                                                  3.                                               88-702

       [282 N.W. 837].) As concisely stated by the New York Court of Appeals, `officers
       of special and limited jurisdiction cannot sit in review of their own orders or vacate
       or annul them'. (People ex rel. Chase v. Wemple, 144 N. Y. 478 [39 N. E. 397].) But
       if it is clear that the legislature intended that the agency should exercise a continuing
       jurisdiction with power to modify or alter its orders to conform to changing
       conditions, the doctrine of res judicata is not applicable. The determination depends
       upon the provisions of the particular statute.

               ". . . And since all administrative action must be grounded in statutory
       authority, in the absence of a provision allowing a commission to change its
       determination, courts have usually denied the right so to do." (Emphasis added.)

(Accord, Hollywood Circle, Inc. v. Dept. of Alc. Bev. Cont. (1961) 55 Cal.2d 728, 732.) We find
no such provision in the statute in question. (See § 17551(a) supra.)

                 Further, the rule would not apply where the agency's decision exceeded its authority
or was made without sufficient evidence. In Aylward v. State Bd. etc. Examiners (1948) 31 Cal.2d
833, the Board of Chiropractic Examiners adopted, without notice, and based upon the board's own
records, a resolution canceling forty licenses, previously issued by the board, to practice chiropractic
on the ground that such licenses had been issued contrary to numerous prerequisites of the
Chiropractic Act. This action purported to reverse the action of the board during the previous year,
in which it was concluded, upon a noticed and contested hearing, that "none of the matters presented
were grounds under the Chiropractic Act for revocation of any licenses." The Supreme Court held
that the board improperly canceled the licenses in the absence of a statutorily required noticed
hearing (id. at 838), but that the board should not be precluded from taking adverse action based on
any proper legal ground (id. at 842). The court explained as follows (id. at 839):

               "The agency however, may be bound by its prior action where it has made
       a determination of a question of fact within its powers, and it lacks authority to
       rehear or reopen the question. (Olive Proration etc. Com. v. Agricultural etc. Com.,
       17 Cal.2d 204, 209; Heap v. City of Los Angeles, 6 Cal.2d 405; Proud v. McGregor,
       9 Cal.2d 178, 179; Pacheco v. Clark, 44 Cal.App.2d 147, 153; Hoertkorn v. Sullivan,
       67 Cal.App.2d 151, 154; Matson Terminals, Inc. v. California Emp. Com., 24 Cal.2d
       695, 702.)

                "Implicit in the cases denying a board's power to review or reexamine a
       question, however, is the qualification that the board must have acted within its
       jurisdiction and within the powers conferred on it. Where a board's order is not
       based upon a determination of fact, but upon an erroneous conclusion of law, and is
       without the board's authority, the order is clearly void and hence subject to collateral
       attack, and there is no good reason for holding the order binding on the board. Not
       only will a court refuse to grant mandate to enforce a void order of such a board
       (Proud v. McGregor, 9 Cal.2d 178; Pacheco v. Clark, 44 Cal.App.2d 147), but
       mandate will lie to compel the board to nullify or rescind its void acts. (Board of
       Trustees v. State Bd. of Equalization, 1 Cal.2d 784. While a board may have
       exhausted its power to act when it has proceeded within its powers, it cannot be said
       to have exhausted its power by doing an act which it had no power to do or by
       making a determination without sufficient evidence. In such a case, the power to act
       legally has not been exercised, the doing of the void act is a nullity, and the board
       still has unexercised power to proceed within its jurisdiction." (Emphasis added.)



                                                  4.                                               88-702

                In Ferdig v. State Personnel Board (1969) 71 Cal.2d 96, the board had approved the
appointment of an applicant to a state civil service position. More than seven months later, the
board, after a hearing, adopted its order revoking the appointment due to the erroneous grant of
veterans' preference points. (Id. at 100.) Responding to the contention that the initial order
approving the appointment having become final, the board was, in the absence of statutory authority,
without jurisdiction to reconsider it, the court observed (id. at 105-106):

               "What we examine here is the jurisdiction of the Board to take corrective
       action with respect to an appointment which it lacked authority to make. It defies
       logic to say that the mere enumeration in the Act of the methods of separating an
       employee from state civil service in a situation where an appointment has been
       validly made, compels the conclusion that no jurisdiction exists to rectify the action
       of the Board in a situation where an appointment has been made without authority.

               ". . . . . . . . . . . . . . . . . . . . . . .

                "We conclude, therefore, that when the matter was brought to its attention,
       the Board had jurisdiction to inquire into and review the certification as to veterans'
       preference credits made by the Department of Veterans Affairs and having
       determined that appellant was not entitled to such credits, to take the corrective
       action which it did by revoking appellant's appointment. While this jurisdiction does
       not appear to have been conferred upon the Board in so many words by the express
       or precise language of constitutional or statutory provision, there can be no question
       in that it is implicit in the constitutional and statutory scheme which empowers the
       Board to administer and enforce the civil service laws."

                Determinations by the commission as to entitlement of local agencies to
reimbursement for state mandated costs are questions of law. (Carmel Valley Fire Protection Dist.
v. State of California, supra, 190 Cal.App.3d at 536.) An administrative agency is not authorized
to act contrary to law. (Ferdig v. State Personnel Board, supra, 71 Cal.2d at 103-104.)
Consequently, where the decision in a prior case was based upon an erroneous legal premise, and
is contrary to law (e.g., licenses issued or veterans preference points granted contrary to law), the
administrative agency, having exceeded its authority, may reconsider its decision notwithstanding
the absence of express statutory sanction. In the case presented for illustrative purposes, the
commission's prior determination, based upon an erroneous interpretation of law, to provide a
subvention for an incidental increase in local costs arising upon an increase in workers'
compensation benefits, was contrary to law. Under the principles set forth above, the commission
would be authorized to reconsider its prior decision.

               The question remains, however, whether the Legislature in this instance has
authorized a different result, precluding the commission from reconsidering a prior final decision.2
The commission is authorized to adopt procedures for hearing claims and for the taking of evidence.

  2
    To be clear, this opinion concerns the reconsideration of a prior decision, i.e., which has become
final, for the purpose of determining whether the decision in that case should be modified or
reversed. We do not question the power of an administrative agency to reconsider a prior decision
for the purpose of determining whether that decision should be overruled in a subsequent case. It
is long settled that due process permits substantial deviation by administrative agencies from the
principle of stare decisis. (Weiss v. State Bd. of Equal. (1953) 40 Cal.2d 772, 776.) An agency may
disregard its earlier decision, provided that its action is neither arbitrary nor unreasonable. (Id., at
777.)

                                                  5.                                             88-702

(§ 17553.)3 Pursuant to its authority to adopt and amend rules and regulations (§ 17527, subd. (g)),
the commission has promulgated rules for the conduct of hearings. (Tit. 2, C.C.R., §§ 1187-1188.3,
hereafter referred to as "rules.") Upon receipt of a claim, the commission is required to conduct a
hearing within a reasonable time. (§ 17555; rule 1187.1, subd. (a).) The hearing shall be conducted
in accordance with specified rules of evidence and procedure. (Rules 1187.5, 1187.6.) Prior to the
adoption of its written decision the commission may, on its own motion or upon a showing of good
cause, order a further hearing. (Rule 1187.9, subd. (a).) Within a reasonable time following the
hearing, a proposed decision of the commission panel, commission staff, or hearing officer, as the
case may be, shall be prepared and served upon the parties. (Rule 1188.1.) The decision of the
commission itself must be written, based on the record, and contain a statement of reasons for the
decisions, findings and conclusion. (Rule 1188.2, subd. (a).) After the decision has been served,
it shall not be changed except to correct clerical errors. (Rule 1188.2, subd. (b).) Either party may
commence a proceeding for judicial review of a decision of the commission. (§ 17559.) The period
of limitations applicable to such review is three years. (Carmel Valley Fire Protection Dist. v. State
of California, supra, 190 Cal.App.3d at 534.)

                 If the commission determines that costs are mandated by the state, it must determine
the amount to be subvened to local agencies and adopt "parameters and guidelines" for
reimbursement of claims. (§ 17557; rule 1183.1.) Thereafter, the commission shall adopt an
estimate of statewide costs resulting from the mandate. (Rule 1183.3, subd. (a).) At least twice each
calendar year, the commission is required to identify and report to the Legislature the statewide costs
estimated for each mandate and the reasons for recommending reimbursement. (§ 17600; rule
1183.3, subd. (b).) The amounts awarded are included in the local government claims bill and
thereafter, in the case of continuing costs, in the budget bill for subsequent fiscal years. (§ 17561,
subd. (b)(2).)

                The Supreme Court has applied a uniform set of rules when reviewing the validity
of administrative regulations. "Where a statute empowers an administrative agency to adopt
regulations, such regulations `must be consistent, not in conflict with the statute, and reasonably
necessary to effectuate its purpose.'" (Ontario Community Foundation, Inc. v. State Bd. of
Equalization (1984) 35 Cal.3d 811, 816.) "[T]here is no agency discretion to promulgate a
regulation which is inconsistent with the governing statute." (Woods v. Superior Court (1981) 28
Cal.3d 668, 679.) "Administrative regulations that violate acts of the Legislature are void and no
protestations that they are merely an exercise of administrative discretion can sanctify them."
(Morris v. Williams (1967) 67 Cal.2d 733, 737.) "Administrative regulations that alter or amend that
statute or enlarge or impair its scope are void and courts not only may, but it is their obligation to
strike down such regulations." (Ontario Community Foundation, Inc. v. State Bd. of Equalization,
supra, 35 Cal.3d 811,816-817; emphasis added.) "It is fundamental that an administrative agency
may not usurp the legislative function, no matter now altruistic its motives are." (Agricultural Labor
Relations Bd. v. Superior Court (1976) 16 Cal.3d 392, 419.)

                 There is no indication in the statutory scheme that the jurisdiction of the commission
is limited to rectify its action where a determination of entitlement had been adopted without
authority. As observed in Ferdig v. State Personnel Board, supra, 106, "[w]hile this jurisdiction
does not appear to have been conferred upon the [commission] in so many words by the express or
precise language of constitutional or statutory provision, there can be no question that it is implicit
in the constitutional and statutory scheme which empowers that [commission to provide `an effective
means of resolving disputes over the existence of state-mandated local programs' (sec. 17500).]"

  3
   The commission is not subject to the provisions of the California Administrative Procedure Act
pertaining to administrative adjudication. (§§ 11500, 11501.)

                                                  6.                                           88-702
                 To the extent that rule 1188.2, subdivision (b), may be interpreted to foreclose the
commission from rectifying a decision made or action taken contrary to law, it impairs the scope of
the statute, and to that extent is void. (Cf. Ontario Community Foundation, Inc. v. State Bd. of
Equal., supra, 35 Cal.3d at 816-817; 64 Ops.Cal.Atty.Gen. 425, 430 (1981).) In our view, an
administrative agency has no more power to promulgate a rule preserving or perpetuating its
decisions made or actions taken without authority, than it has to undertake such decisions or actions
in the first instance.

                It is concluded that the commission is authorized to reconsider a prior final decision
relating to entitlement for reimbursement for state mandated costs, where the prior decision was
contrary to law.

                                              *****




                                                  7.                                          88-702

