D taught sixth grade. The school district terminated the teacher's employment after two students accused him of engaging in inappropriate sexual conduct. D applied to P to reinstate his Oregon teaching license, which had expired. P held a contested case hearing to determine whether D had good moral character and was fit to serve as a teacher. P's attorney conceded that D at least prima facie met the eligibility requirements for a teaching license. P then introduced evidence to support its allegations that D had engaged in inappropriate sexual conduct involving Michelle and Leasa, two female students in P's sixth-grade class. Neither Michelle nor Leasa testified. P introduced hearsay and multiple hearsay testimony that D had touched Michelle's breast on one occasion and her buttocks on another occasion and that he had kept Leasa after school in locked her in the classroom, touched her 'on the breast and in the vaginal area,' and lowered his trousers. There was hearsay and multiple hearsay testimony that students had complained, that D made them feel uncomfortable, stood too close to them, discussed inappropriate topics (such as 'french kissing') with them, and used gestures and winks that appeared sexual. D admitted touching Michelle's breast but said that the contact was inadvertent. As to Leasa D contended that she had fabricated the story to punish him for telling the school counselor that Michelle, who was her friend, was involved with prostitution and drugs. A school employee testified that she had overheard Michelle say, 'I'm gonna get D.' Two teachers testified that the doors of the classrooms could not be locked from the inside. A teacher's aide testified that she was usually present in D's classroom after school and had never seen him alone with Leasa. D found that P had engaged in inappropriate sexual behavior involving Michelle and Leasa. P made other findings based on nothing but hearsay evidence. P concluded that D 'lacks good moral character to serve as a teacher' and denied his application. D appealed and the court of appeals affirmed. D appealed.