(a) The chief administrative law judge shall, by regulation, establish procedures for administrative hearings conducted by the office. Each administrative hearing under the jurisdiction of the office or that has been transferred to the office by an agency shall be conducted in accordance with statutes that apply to that hearing, including, if applicable, AS 44.62 (Administrative Procedure Act). In case of conflict between this section and another applicable statute establishing procedures for administrative hearings, the other statute prevails. However, to the extent regulations adopted by an agency for the conduct of an administrative hearing conflict with regulations adopted by the chief administrative law judge under this subsection, the regulations adopted by the chief administrative law judge control to the maximum extent possible without conflicting with applicable statutes.

(b) When an agency receives a request for a hearing that is subject to AS 44.64.030, the agency shall, within 10 days and in writing, deny the request for reasons provided by law or grant the request and refer the case to the office. The agency shall immediately give notice of the denial or referral to the requesters and the office. If the request is denied, the denial may be appealed to the superior court as provided by other law. If the request is granted, the agency shall, within 15 days after receiving the request, compile and transmit to the office a copy of the request for a hearing, the names, addresses, and telephone numbers of all parties and their representatives, and the agency's decision, if any, together with the record relied on to support the decision. Any information provided to the office that is confidential by law shall be identified by the agency as confidential and shall be kept confidential by the office.

(c) The agency may, with materials transmitted under (b) of this section, request the chief administrative law judge to permit the individual, board, or commission that will make the final decision to participate with the assigned administrative law judge in the conduct of the administrative hearing. The chief administrative law judge shall determine the degree and manner of participation and may terminate that participation at any time. However, the individual, board, or commission that participates under this subsection may not serve as the administrative law judge or preside during the hearing and may not take action on behalf of the agency in the agency's capacity as a party to the proceedings.

(d) An administrative law judge employed or retained by the office shall, within 120 days after the date the agency received the request for a hearing, prepare a proposed decision, unless another time period is provided by law or agreed to by the parties and the chief administrative law judge. The administrative law judge shall immediately submit the proposed decision to the agency.

(e) A proposed decision in an administrative hearing shall be in a form that may be adopted as the final decision by the agency with authority to make the final decision. The proposed decision is a public record, except as otherwise provided by statute. A copy of the proposed decision shall be served by the office on each party in the case or on the attorneys representing those parties in the hearing. Unless the office has established a shorter time period or another statute has established a different time period, within 30 days after the proposed decision is served, a party may file with the agency a proposal for action under (1) - (5) of this subsection. The agency with authority to make a final decision in the case retains agency discretion in the final disposition of the case and shall, within 45 days after the date the proposed decision is served or at the next regularly scheduled meeting that occurs at least 45 days after the proposed decision is served, do one or more of the following:

(1) adopt the proposed decision as the final agency decision;

(2) return the case to the administrative law judge to take additional evidence or make additional findings or for other specific proceedings, in which case the administrative law judge shall complete the additional work and return the revised proposed decision to the agency within 45 days after the original decision was returned under this paragraph;

(3) exercise its discretion by revising the proposed enforcement action, determination of best interests, order, award, remedy, sanction, penalty, or other disposition of the case, and adopt the proposed decision as revised;

(4) in writing, reject, modify, or amend a factual finding in the proposed decision by specifying the affected finding and identifying the testimony and other evidence relied on by the agency for the rejection, modification, or amendment of the finding, and issue a final agency decision;

(5) in writing, reject, modify, or amend an interpretation or application in the proposed decision of a statute or regulation directly governing the agency's actions by specifying the reasons for the rejection, modification, or amendment, and issue a final agency decision.

(f) If a final decision is not issued timely in accordance with (e) of this section, the administrative law judge's proposed decision is the final agency decision.