PNW Metal Recycling, Inc. v. DEQ

No. 35 December 7, 2023 673

IN THE SUPREME COURT OF THE

STATE OF OREGON

PNW METAL RECYCLING, INC.,

dba Rivergate Scrap Metals,

dba RS Davis Recycling,

dba PNW Auto Parts,

dba Orient Auto Parts and Recycling,

an Oregon corporation;

Schnitzer Steel Industries, Inc.,

an Oregon corporation;

and Pacific Recycling, Inc.,

an Oregon corporation,

Respondents on Review,

v.

OREGON DEPARTMENT OF

ENVIRONMENTAL QUALITY,

an agency of the State of Oregon,

Petitioner on Review.

(CA A171317) (SC S069412)

On review from the Court of Appeals.*

Argued and submitted November 17, 2022.

Denise G. Fjordbeck, Assistant Attorney General, Salem,

filed the opening brief for petitioner on review. Carson L.

Whitehead, Assistant Attorney General, Salem, argued the

cause and filed the reply brief for petitioner on review. Also

on the briefs were Ellen F. Rosenblum, Attorney General,

and Benjamin Gutman, Solicitor General.

Jon W. Monson, Cable Huston LLP, Portland, and Crystal

S. Chase, Stoel Rives LLP, Portland, argued the cause and

filed the brief for respondents on review. Also on the brief

were Nicole M. Swift and Nicole A. W. Abercrombie, Cable

Huston LLP, Portland, and Kirk B. Maag, Stoel Rives LLP,

Portland.

______________

* On judicial review from a decision of the Department of Environmental

Quality. 317 Or App 207, 505 P3d 462 (2022).

674 PNW Metal Recycling, Inc. v. DEQ

Lindsay Thane, Schwabe, Williamson & Wyatt PC,

Portland, filed the brief for amici curiae Northwest Pulp &

Paper Association, Oregon Business & Industry Association,

Oregon Farm Bureau, Oregon Forest Industries Council,

and Oregonians for Food and Shelter.

Jennifer Gates, Pearl Legal Group, Portland, filed

the brief for amicus curiae Institute of Scrap Recycling

Industries Pacific Northwest Chapter.

Before Flynn, Chief Justice, Duncan, Garrett, DeHoog,

and Masih, Justices, and Balmer and Walters, Senior

Judges, Justices pro tempore.**

GARRETT, J.

The decision of the Court of Appeals is vacated. The judi-

cial review is dismissed.

**Nelson, J., resigned February 25, 2023, and did not participate in the deci-

sion of this case. Bushong and James, JJ., did not participate in the consideration

or decision of this case.

______________

** Nelson, J., resigned February 25, 2023, and did not participate in the

decision of this case. Bushong and James, JJ., did not participate in the consider-

ation or decision of this case.

Cite as 371 Or 673 (2023) 675

GARRETT, J.

Under ORS 459.205, a person operating a solid waste

disposal site must obtain a permit from the Department of

Environmental Quality (DEQ). Before 2018, DEQ did not

apply that permit requirement to facilities that disman-

tled and recycled used vehicles, even if those facilities also

disposed of other solid waste. Petitioners operate facilities

that engage in both vehicle and nonvehicle recycling and

which, therefore, historically were not subject to the permit

requirement.1 In 2018, DEQ informed petitioners that the

agency had changed its view of the relevant statutes and

that, based on that revised interpretation, petitioners would

be required to obtain permits.

Petitioners initiated this challenge under ORS

183.400, contending that DEQ’s change of position consti-

tuted a “rule” under the Oregon Administrative Procedures

Act (APA); that DEQ had adopted the rule without follow-

ing APA rulemaking procedures; and that DEQ could not

lawfully promulgate a rule in any event because DEQ lacks

rulemaking authority. Agreeing with petitioners that DEQ

had improperly adopted a rule, the Court of Appeals held

DEQ’s decision invalid. PNW Metal Recycling, Inc. v. DEQ,

317 Or App 207, 213, 505 P3d 462 (2022).

DEQ sought review, which we allowed. For the

reasons explained below, we conclude that petitioners’ rule

challenge under ORS 183.400 must be dismissed. DEQ’s

internal decision to adopt a new interpretation of a statute

is not, by itself, a “rule.” We vacate the decision of the Court

of Appeals and dismiss the judicial review.

I. BACKGROUND

This case presents an important question of admin-

istrative law, the resolution of which turns on several dis-

tinct statutory schemes. A brief overview of those statutes

will provide helpful context for understanding the facts that

led to this dispute. Accordingly, we begin by describing,

1

In requesting judicial review of the validity of an agency rule, the party

requesting review is denominated the “petitioner.” ORS 183.400. Thus, although

PNW Metal Recycling et al. are the respondents on review in this court, we refer

to those participants as “petitioners” throughout this opinion.

676 PNW Metal Recycling, Inc. v. DEQ

first, the relevant provisions of the APA; second, statutes

establishing DEQ and setting out its authority; and third,

statutes regulating solid waste disposal. After doing so, we

discuss the historical facts.

A. Oregon APA Requirements

Executive branch agencies perform functions that

can be described as legislative (adoption of rules), executive

(enforcement of statutes and rules), or adjudicative (deter-

mination of rights and obligations in particular cases). In

all events, an agency’s authority is defined by the legisla-

ture. An agency is a creature of statute, and the scope of

its substantive power is set forth in and circumscribed by

its enabling statute. See SAIF v. Shipley, 326 Or 557, 561,

955 P2d 244 (1998) (“[A]n agency has only those powers that

the legislature grants and cannot exercise authority that it

does not have.”); Trebesch v. Employment Division, 300 Or

264, 267, 710 P2d 136 (1985) (“The authorizing statutes will

specify whether rulemaking or adjudication authority, or

both, are delegated to the agency and will indicate the agen-

cy’s tasks, the breadth of the agency’s discretion to carry out

these tasks, and the process by which they are to be accom-

plished.”). For example, an enabling statute might articu-

late a legislative policy objective such as clean air or clean

water, direct an agency to further that goal, and authorize

the agency to undertake specific actions in doing so, such as

promulgating rules, issuing permits or licenses, and initiat-

ing enforcement actions.

In ORS chapter 183, the APA, in turn, sets out a

series of procedures that generally govern state agencies in

the performance of those functions, as well as judicial review

of agency action. At the heart of the APA is the distinction

between procedures applicable to an agency’s exercise of its

legislative function—which results in a “rule”—and those

governing an agency’s use of its executive and adjudicatory

powers—which are exercised through “orders,” sometimes

following “contested cases.”

“Rules,” as a species of lawmaking, are meant to

apply generally. Subject to exceptions discussed further

below, the APA defines “rule” as “any agency directive,

Cite as 371 Or 673 (2023) 677

standard, regulation or statement of general applicability

that implements, interprets or prescribes law or policy, or

describes the procedure or practice requirements of any

agency.” ORS 183.310(9). ORS 183.325 to 183.410 set out

detailed requirements for agency rulemaking proceedings,

including the requirements of public notice and opportu-

nity for comment by interested persons, ORS 183.335; filing

and publication of rules, ORS 183.355, ORS 183.360, ORS

183.365; and a provision invoked in this case by which a per-

son may challenge the validity of a rule by filing a petition

with the Court of Appeals, ORS 183.400.

“Orders,” in contrast, are particularized. Subject to

exceptions, the APA defines “order” as “any agency action

expressed orally or in writing directed to a named person or

named persons, other than employees, officers or members

of an agency. ‘Order’ includes any agency determination or

decision issued in connection with a contested case proceed-

ing.” ORS 183.310(6)(a).

A “contested case” is defined as follows:

“(a) ‘Contested case’ means a proceeding before an

agency:

“(A) In which the individual legal rights, duties or

privileges of specific parties are required by statute or

Constitution to be determined only after an agency hearing

at which such specific parties are entitled to appear and be

heard;

“(B) Where the agency has discretion to suspend or

revoke a right or privilege of a person;

“(C) For the suspension, revocation or refusal to renew

or issue a license where the licensee or applicant for a

license demands such hearing; or

“(D) Where the agency by rule or order provides for

hearings substantially of the character required by [cer-

tain other provisions of the APA].

“(b) ‘Contested case’ does not include proceedings in

which an agency decision rests solely on the result of a test.”

ORS 183.310(2). In ORS 183.411 to 183.471, the APA

prescribes procedures for contested cases, including

678 PNW Metal Recycling, Inc. v. DEQ

requirements of notice, opportunities for discovery, intro-

duction of evidence, representation by counsel, and entry of

final orders with findings of fact and conclusions of law.

The APA thus contemplates that, as a general mat-

ter, an agency’s application of law or policy to particular

facts will occur through an order (sometimes following a

contested case), while an agency action that “implements,

interprets or prescribes law or policy” in a way that has

“general applicability,” ORS 183.310(9), will occur through

rulemaking. But that general distinction has an important

exception. The APA also provides:

“A rule is not valid or effective against any person or

party until the rule is filed in accordance with this section.

However, if an agency, in disposing of a contested case,

announces in its decision the adoption of a general policy

applicable to the case and subsequent cases of like nature

the agency may rely upon the decision in disposition of later

cases.”

ORS 183.355(6) (emphasis added). Thus, in a contested

case proceeding, an agency may make a statement that

otherwise has the character of a rule—because it is an

“adoption of a general policy” applicable not only to the

case but to “cases of like nature.” And, in that event, the

agency may apply the policy prospectively even though it

was adopted without the notice-and-comment features of

formal rulemaking. To put it another way, the fact that

an agency makes a statement of policy that is consistent

with the definition of “rule” does not mean that the agency

must make that statement through rulemaking proceed-

ings. See Homestyle Direct, LLC v. DHS, 354 Or 253, 265-

66, 311 P3d 487 (2013) (“Merely because a given adminis-

trative standard or policy satisfies the statutory definition

of a ‘rule’ under the [APA] does not necessarily mean

that it is invalid unless preceded by notice and comment

rulemaking proceedings.” (Citing ORS 183.355(6).)). As we

will explain later in this opinion, in some circumstances

an agency must use rulemaking rather than the contested

case process to announce policy; whether that is so, how-

ever, is determined not by the APA, but, instead, by the

agency’s substantive enabling statutes.

Cite as 371 Or 673 (2023) 679

B. DEQ and EQC

The legislature has enacted an extensive statutory

scheme for environmental protection, addressing matters

ranging from solid waste management (ORS chapter 459) to

air quality (ORS chapter 468A) to water quality (ORS chap-

ter 468B) to hazardous waste (ORS chapters 465 and 466),

among others.

ORS chapter 468 establishes two entities with sig-

nificant responsibility for administering and enforcing that

regulatory scheme: the Environmental Quality Commission

(EQC) and DEQ. ORS 468.010 provides that the EQC con-

sists of five members appointed by the Governor and con-

firmed by the Senate. ORS 468.015 states that the func-

tion of EQC is to “establish the policies for the operation

of [DEQ].” ORS 468.020(1) provides that EQC “shall adopt

such rules and standards as it considers necessary and

proper in performing the functions vested by law in the

[EQC],” with such adoption of rules and standards to be

made “[i]n accordance with the applicable provisions of [the

APA].” Thus, the EQC has an express grant of authority to

make “rules” that are necessary to carry out the functions

vested in it by statute.

DEQ is separately created by ORS 468.030, which

provides that the department exists “under” EQC and con-

sists of a “[d]irector” and other personnel. ORS 468.040 pro-

vides that the DEQ director is appointed by the EQC and

serves at the pleasure of the commission. ORS 468.035 sets

out a list of specific functions to be performed by DEQ “[s]

ubject to policy direction by [EQC],” and ORS 468.045(1)

(c) generally provides that the purpose of DEQ, through its

director, is to “[a]dminister and enforce the laws of the state

concerning environmental quality.”

The statutory scheme accordingly contemplates a

basic division of functions whereby EQC has the responsi-

bility to establish “policies” for the operation of DEQ and

the authority to adopt “rules and standards” to carry out its

statutory duties, while DEQ is directed to “[a]dminister and

enforce” the environmental laws “[s]ubject to policy direc-

tion” by EQC.

680 PNW Metal Recycling, Inc. v. DEQ

C. Solid Waste Disposal and Permitting

Among numerous subjects of environmental regu-

lation, the legislature has enacted a statutory scheme for

“solid waste management,” codified in ORS chapter 459.

“Solid waste” is defined to mean

“all useless or discarded putrescible and nonputrescible

materials, including but not limited to garbage, rubbish,

refuse, ashes, paper and cardboard, sewage sludge, septic

tank and cesspool pumpings or other sludge, useless or

discarded commercial, industrial, demolition and construc-

tion materials, discarded or abandoned vehicles or parts

thereof, discarded home and industrial appliances, manure,

vegetable or animal solid and semisolid materials, dead

animals and infectious waste as defined in ORS 459.386.

‘Solid waste’ does not include:

“(a) Hazardous waste as defined in ORS 466.005.

“(b) Materials used for fertilizer or for other produc-

tive purposes or which are salvageable as such materials

are used on land in agricultural operations and the grow-

ing or harvesting of crops and the raising of animals.

“(c) Woody biomass that is combusted as a fuel by

a facility that has obtained a permit described in ORS

468A.040.”

ORS 459.005(25) (emphasis added). As defined, solid waste

includes a wide range of material, including, as relevant to

this case, “discarded or abandoned vehicles or parts thereof.”

Id.

ORS 459.045 addresses rulemaking by EQC in the

area of solid waste management. ORS 459.045(1) states

that EQC “shall” adopt rules pertaining to certain aspects

of solid waste management, and ORS 459.045(2) states that

the commission “may” adopt other rules; that statute does

not, however, specifically address rulemaking with respect

to the issuance or denial of permits. The parties have iden-

tified no statute, and we are aware of none, that grants DEQ

rulemaking authority on that subject.

Several provisions of ORS chapter 459 deal with

“disposal sites.” As relevant here, ORS 459.205 states that

Cite as 371 Or 673 (2023) 681

“a disposal site shall not be established, operated, main-

tained or substantially altered, expanded or improved, and

a change shall not be made in the method or type of dis-

posal at a disposal site, until the person owning or con-

trolling the disposal site obtains a permit therefor from the

Department of Environmental Quality as provided in ORS

459.235.”

Under that statute, DEQ is charged with issuing permits for

“disposal sites.” The legislature has defined a “disposal site”

as follows:

“(a) ‘Disposal site’ means land and facilities used for

the disposal, handling or transfer of, or energy recovery,

material recovery and recycling from solid wastes, includ-

ing but not limited to dumps, landfills, sludge lagoons,

sludge treatment facilities, disposal sites for septic tank

pumping or cesspool cleaning service, transfer stations,

energy recovery facilities, incinerators for solid waste

delivered by the public or by a collection service, compost-

ing plants and land and facilities previously used for solid

waste disposal at a land disposal site.

“(b) ‘Disposal site’ does not include:

“* * * * *

“(D) A site operated by a dismantler issued a certifi-

cate under ORS 822.110.”

ORS 459.005(8). Thus, the definition of a “disposal site” that

cannot be operated without a permit from DEQ excludes

sites operated pursuant to a “certificate under ORS 822.110.”

ORS 822.110 is part of the Oregon Vehicle Code and pro-

vides for the Oregon Department of Transportation (ODOT)

to issue a “dismantler certificate” to entities that meet spec-

ified requirements.

To summarize, the legislature has provided that

DEQ shall be responsible for administering a mandatory

permit program for solid waste disposal sites, ORS 459.205,

and the legislature has further provided that “solid waste”

includes “discarded or abandoned vehicles or parts thereof.”

ORS 459.005(25). At the same time, the legislature has

stated that a “disposal site” for which permits are required

does not include a “site” operated by a person that has

obtained a vehicle “dismantler certificate” from ODOT. ORS

682 PNW Metal Recycling, Inc. v. DEQ

459.005(8)(b)(D). We refer to that statute throughout this

opinion as the “auto-dismantler exception.” The interplay

among those provisions is central to the parties’ arguments

in this case.

D. Factual Background

The relevant facts are largely procedural and are

undisputed. Petitioners operate scrap metal recycling facil-

ities that accept and process both vehicular and nonvehicu-

lar materials. Those materials fall within the statutory defi-

nition of “solid waste” under ORS 459.005(25). Petitioners

also, however, hold vehicle dismantler certificates issued by

ODOT under ORS 822.110.

Before the events giving rise to this case, DEQ had

not applied ORS 459.205, the statute that requires permits

for solid waste disposal sites, to facilities that hold vehicle

dismantler certificates, even if those facilities engaged in

other solid waste disposal functions. Instead, DEQ required

a facility to obtain a solid waste disposal permit only if the

facility had no vehicle processing operations. The record

does not reflect the reason for that historical practice by

DEQ.

A March 2018 fire at a Portland automobile shred-

ding facility (not operated by either of the petitioners)

prompted DEQ to undertake a review to “identify potential

gaps in environmental regulation of automobile disman-

tlers.” In an internal memorandum in August of that year,

DEQ staff noted the following about the auto-dismantler

exception:

“DEQ historically has applied the statutory exemption

from solid waste management regulation as applying to

an entire operation, even if that operation includes solid

waste other than automobiles. Nevertheless, the statutory

exemption could be applied narrowly to only cover auto dis-

mantling operations—leaving other solid waste activities

subject to regulation.”

Interpreting the auto-dismantler exception in ORS

459.005(8)(b)(D) more narrowly was just one of several

options that the staff memorandum identified. Other

options included: (1) maintaining the status quo; (2) formally

Cite as 371 Or 673 (2023) 683

adopting new administrative rules for “interpreting the

[auto-dismantler] exclusion”; (3) proposing a bill to the leg-

islature to “remove or clarify the auto dismantler exemp-

tion”; and (4) proposing a bill to the legislature to “direct

DEQ to issue permits or take other specific actions.”

In July and November 2018, following separate site

inspections of petitioners’ facilities, DEQ informed petition-

ers in writing that their facilities would be subject to the

permitting requirement for nonvehicular waste processing,

even though those facilities held dismantling certificates

from ODOT. In December, DEQ staff met with representa-

tives of petitioner PNW Metal Recycling. At that meeting,

DEQ staff acknowledged that, “historically, we’ve said, if you

had the DMV [auto-dismantler] certificate, then you’re not

defined as a disposal site by law.” DEQ staff then explained

the agency’s change of view, viz., that “[DEQ has] clarified

* * * that, for those facilities that accept other types of waste

materials in addition to vehicles, they are a disposal site,

and they should be regulated under a DEQ permit.” During

the meeting, agency staff also indicated that DEQ intended

to apply the permitting requirement to other similarly situ-

ated facilities, not just petitioners.

Petitioners chose to challenge DEQ’s decision by

initiating this proceeding under ORS 183.400, which pro-

vides that “[t]he validity of any rule may be determined

upon a petition by any person to the Court of Appeals.” ORS

183.400(1). Petitioners argued that DEQ’s new interpre-

tation of the auto-dismantler exception was a “rule,” that

DEQ had failed to follow rulemaking procedures, and that

DEQ lacked rulemaking authority. Petitioners advanced

only those procedural arguments; they did not argue that

DEQ’s new interpretation was substantively incorrect. DEQ

sought to dismiss, arguing that ORS 183.400 is inapplica-

ble because the agency had not promulgated a “rule.” The

Appellate Commissioner concluded that the question of

whether the challenged action was a rule warranted resolu-

tion by a panel.

Before the Court of Appeals panel, petitioners

pressed their arguments that DEQ’s decision to change its

interpretation of the auto-dismantler exception constituted

684 PNW Metal Recycling, Inc. v. DEQ

a new rule, that the rule had been adopted without follow-

ing APA rulemaking procedures, and that DEQ lacked the

statutory authority to engage in rulemaking in any event.

In response, DEQ agreed that, if the agency’s decision con-

stitutes a rule, it is invalid, but argued that no rule had been

adopted.

The Court of Appeals agreed with petitioners. After

consulting the definition of “rule” in ORS 183.310(9) (“any

agency directive, standard, regulation or statement of gen-

eral applicability that implements, interprets or prescribes

law or policy, or describes the procedure or practice require-

ments of any agency”), the Court of Appeals concluded that

DEQ’s action met that definition. PNW Metal Recycling, Inc.,

317 Or App at 213. Relying on its own case law, that court

reasoned that DEQ’s evolving interpretation of the auto-dis-

mantler exception showed that multiple interpretations are

“reasonable,” and DEQ’s decision to change its interpretation

was therefore a “new exercise of agency discretion[,] which

must be promulgated as a rule to be valid.” Id. at 212 (inter-

nal quotation marks omitted). The Court of Appeals rejected

DEQ’s argument that the agency’s action was not “generally

applicable,” noting that the agency had stated its intention

to apply its new interpretation to other similarly situated

facilities in addition to those operated by petitioners.

DEQ sought review of the Court of Appeals deci-

sion, which we allowed.

II. ANALYSIS

A. Brief Overview

At the outset, we note the peculiar posture of the

case before us. This proceeding is ostensibly a challenge

under ORS 183.400 to the validity of DEQ’s “rule.” But the

agency disputes that it adopted any rule; moreover, the

gravamen of petitioners’ argument is that rulemaking was

required and did not occur. Petitioners further contend that,

although rulemaking was required, DEQ could not have

done it, because the agency lacks statutory authority to pro-

mulgate rules; only EQC can do that. In sum, petitioners

argue that DEQ made a decision that constitutes a “rule”;

that DEQ did not comply with rulemaking procedures and

Cite as 371 Or 673 (2023) 685

lacked the power to do so; but that the type of decision DEQ

made is nevertheless one that required rulemaking.

As discussed below, DEQ’s internal decision to

adopt a new interpretation of the auto-dismantler exception

was not a “rule.” In explaining that conclusion, we address

certain premises underlying petitioners’ arguments and

the Court of Appeals decision that are not entirely cor-

rect. Petitioners contend, for example, that DEQ’s decision

to change its interpretation of the auto-dismantler excep-

tion was a discretionary policy choice that could only be

made through rulemaking. Implicit in that argument is

the assumption that, if an agency’s action makes “policy”

or is otherwise consistent with the definition of rule in ORS

183.310(9), then that action must occur through rulemaking

procedures. That assumption is contrary to our case law. As

noted earlier in this opinion, the APA provides that agency

announcements of policy may also occur in contested cases.

But the APA does not determine when one of those mecha-

nisms or the other must be used. In several cases, this court

has explained that agencies must use rulemaking in certain

circumstances; when that is so, however, it is not because

the APA requires it. Whether an agency must use rulemak-

ing in a particular situation is a function of the agency’s

substantive authority as defined by its enabling statutes.

Petitioners have not attempted to demonstrate that

the legislature intended for the application of the auto-dis-

mantler exception to be handled through rulemaking.

Without a properly developed argument that rulemaking

was the required path, petitioners are left to rely solely on

the APA’s definition of “rule” to argue that DEQ’s actions

were procedurally improper. Based on the larger context of

the APA and principles of administrative law set out in this

court’s cases, we conclude that petitioners are mistaken.

B. Definition of “Rule”

ORS 183.310(9) provides, in full:

“ ‘Rule’ means any agency directive, standard, regula-

tion or statement of general applicability that implements,

interprets or prescribes law or policy, or describes the pro-

cedure or practice requirements of any agency. The term

686 PNW Metal Recycling, Inc. v. DEQ

includes the amendment or repeal of a prior rule, but does

not include:

“(a) Unless a hearing is required by statute, internal

management directives, regulations or statements which

do not substantially affect the interests of the public:

“(A) Between agencies, or their officers or their employ-

ees; or

“(B) Within an agency, between its officers or between

employees.

“(b) Action by agencies directed to other agencies or

other units of government which do not substantially affect

the interests of the public.

“(c) Declaratory rulings issued pursuant to ORS

183.410 [(agency determination of applicability of rule or

statute to petitioner)] or 305.105 [(declaratory rulings by

department)].

“(d) Intra-agency memoranda.

“(e) Executive orders of the Governor.

“(f) Rules of conduct for persons committed to the phys-

ical and legal custody of the Department of Corrections, the

violation of which will not result in:

“(A) Placement in segregation or isolation status in

excess of seven days.

“(B) Institutional transfer or other transfer to secure

confinement status for disciplinary reasons.

“(C) Disciplinary procedures adopted pursuant to ORS

421.180 [(disciplinary procedures)].”

This court has not previously decided a case turning on the

definition of “rule,” although we have observed that the defi-

nition is broad. See, e.g., Morgan v. Stimson Lumber Company,

288 Or 595, 602-03, 607 P2d 150 (1980) (“[A]n agency makes

a rule, within the broad meaning of that term, when it does

nothing more than publish its official position on how it

interprets a requirement, standard, or procedure[.]”).

Before proceeding further, we pause to be clear about

petitioners’ assertion as to the nature of the “rule” that DEQ

adopted. Petitioners rely on the 2018 staff memorandum

Cite as 371 Or 673 (2023) 687

proposing a different interpretation of the auto-dismantler

exception; petitioners further rely on DEQ’s written and

oral communications explaining that decision to petitioners.

Petitioners do not contend, however, that any such document

or communication, alone or in the aggregate, constitutes

the rule. (Petitioners also acknowledge that the definition

of “rule” specifically exempts “intra-agency memoranda.”)

Rather, petitioners cite those documents and communica-

tions as “evidence” of the rule, which petitioners describe as

follows: “It is DEQ’s decision to change that interpretation

based on a discretionary choice to impose additional over-

sight to achieve certain policy goals which constitutes the

‘rule’ under ORS 183.310(9).” Similarly, the Court of Appeals

concluded that DEQ’s decision to change its interpretation

was a “new exercise of agency discretion[,] which must be

promulgated as a rule to be valid.” PNW Metal Recycling,

Inc., 317 Or App at 212 (internal quotation marks omitted).

As a textual matter, it is doubtful that DEQ’s inter-

nal decision about how to interpret the statute—as opposed

to some expression of that decision—satisfies the definition

of a rule in ORS 183.310(9). An agency’s internal decision

about how to construe a statute is not self-executing. ORS

183.310(9) refers to an “agency directive, standard, regula-

tion or statement of general applicability that implements,

interprets or prescribes law or policy.” The APA does not

further define “directive, standard, regulation or statement

of general applicability,” but those terms appear to contem-

plate a decision that has been made manifest or apparent

in some way. In that regard, petitioners argue that DEQ’s

action can be described variously as a

“ ‘directive’ (because it directed certain action), a ‘standard’

(because it established criteria for whether an auto dis-

mantler needs to apply for a solid waste permit), a ‘regu-

lation’ (because it had the effect of regulating certain auto

dismantlers by requiring them to apply for a solid waste

permit), and a ‘statement’ (because its actions were memo-

rialized in at least the 2018 memorandum and in oral

statements by senior DEQ staff).”

None of those points is implausible. Importantly, however,

that aspect of petitioners’ argument shifts the focus from

DEQ’s interpretive decision to the manner in which DEQ

688 PNW Metal Recycling, Inc. v. DEQ

articulated that decision. Yet petitioners simultaneously

contend that it is DEQ’s “decision” alone that constitutes the

rule.

In short, although petitioners rest their arguments

on ORS 183.310(9), their arguments based on that definition

are somewhat inconsistent. As a result, that statutory text

cannot quite support the weight that petitioners place on it.

More importantly, the definition of “rule” does not exist in

a vacuum, and the viability of petitioners’ theory ultimately

depends on whether it comports with the text of the defini-

tion when understood in the context of the APA as a whole.

We turn to that question.

C. Other APA Provisions

As noted earlier in this opinion, agencies are crea-

tures of statute. The legislature, in creating an agency,

determines what powers the agency will have, including the

powers of rulemaking, adjudication, or both. Shipley, 326 Or

at 561; Trebesch, 300 Or at 267. Agencies often (though not

always) are granted an array of powers that can be described

as legislative (rulemaking), executive (enforcing statutes

and rules), and adjudicative (resolving particular cases). An

agency with rulemaking authority is subject, by default, to

the procedural requirements of the APA, unless the legis-

lature specifies otherwise. See ORS 183.335 (setting forth

process for notice, content, and public comment on proposed

rules). The rulemaking process includes the opportunity for

the public to provide information to the agency in response

to proposed rules and for interested parties to request hear-

ings. Id.

Agencies also may have adjudicatory functions.

Those functions include the authority to hear contested

cases and “other than contested cases”—to resolve cases

and issue orders. ORS 183.310(2) (defining “contested case”);

ORS 183.310(6) (defining “order”). As noted earlier, the APA

specifically allows agencies to use the contested case process

to adopt general policies that may be applied prospectively

to different parties. ORS 183.355(6). The announcement of

such a general policy may have the hallmarks of a “rule”

under the APA’s definition of that term, ORS 183.310(9),

Cite as 371 Or 673 (2023) 689

because it is an interpretation or statement of law or policy

that will have prospective effect; yet the APA allows such

statements of policy to be made in a contested case proceed-

ing rather than through rulemaking.

The APA also provides that a person may seek a

“declaratory ruling” from an agency “with respect to the

applicability to any person, property, or state of facts of any

rule or statute enforceable by it.” ORS 183.410. Such rulings

are specifically excluded from the definition of “rule.” ORS

183.310(9)(c). Moreover, ORS 183.410 provides that a declar-

atory ruling is reviewable by the Court of Appeals “in the

manner provided in ORS 183.480 [(judicial review of agency

orders)] for the review of orders in contested cases.” The

APA thus contemplates that a request under ORS 183.410

is another avenue, in addition to rules and contested cases,

through which an agency might issue a statement that

announces or implements an interpretation of law or policy.

Such statements are reviewable as if they had been issued in

an order following a contested case proceeding. The legisla-

ture has provided distinct paths to judicial review for differ-

ent types of agency actions.2 By specifying that declaratory

rulings and adoptions of policy in connection with contested

cases are reviewable as orders, the APA makes clear that

not all announcements and interpretations of law or policy

are “rules” subject to facial challenge under ORS 183.400.

For those reasons, petitioners’ focus on the vari-

ous ways in which DEQ’s action is consistent with the APA

definition of “rule” is incomplete. Petitioners’ arguments

proceed from the premise that, if an agency makes a policy

choice, that choice requires rulemaking. But that is not so.

See Homestyle Direct, 354 Or at 266 (“[T]he APA provides

that agencies are authorized to adopt general policies that

2

The APA contains separate provisions for judicial review of rules and

orders. See ORS 183.400 (review of rules); ORS 183.410 (review of declaratory

rulings regarding the applicability of a rule or statute to an adverse party); ORS

183.482 (review in contested cases); ORS 183.484 (review in other than contested

cases); see also ORS 183.400(1) (stating that a person may not bring a rule chal-

lenge under that statute “when the petitioner is a party to an order or a con-

tested case in which the validity of the rule may be determined by a court”); ORS

183.400(2) (providing mechanism—separate from that which allows a party to

challenge a rule in the Court of Appeals under ORS 183.400(1)—through which

a party can challenge a “rule” during an enforcement proceeding).

690 PNW Metal Recycling, Inc. v. DEQ

otherwise would qualify as ‘rules’ during contested case

proceedings, without going through notice-and-comment

rulemaking.”).3

D. Case Law

As just explained, the APA provides that rulemak-

ing and contested case proceedings are both avenues through

which agencies may announce policy. That is not to say that

agencies may freely choose between those mechanisms. In

several cases, this court has addressed the circumstances

in which agencies must engage in rulemaking as a predi-

cate to enforcement. Those cases arose in a different posture

than this one: They involved judicial review of a contested

case rather than a rule challenge. Nevertheless, because the

administrative law principles discussed in those cases pro-

vide helpful context for understanding and resolving peti-

tioners’ arguments in this case, we discuss them below.

The question of whether and when an agency must

use rulemaking proceedings was first addressed in Megdal

v. Board of Dental Examiners, 288 Or 293, 605 P2d 273

(1980). In Megdal, the board revoked the petitioner’s license

to practice dentistry pursuant to the board’s statutory

authority to regulate the profession and discipline licensees

for “unprofessional conduct.” 288 Or at 295. The statute did

not define “unprofessional conduct”; although the board had

rulemaking authority, the board also had not promulgated

rules defining that term.

This court concluded that the undefined term

“unprofessional conduct” reflected a delegation from the leg-

islature to the board “to expand the list of conduct deemed

unprofessional for disciplinary purposes by rules.” Id. at

316. We further reasoned that the board could lawfully have

interpreted “unprofessional conduct” to include the type of

fraudulent business practice in which the petitioner had

engaged. But because the board had not done so, no source

3

This point should not be taken to mean that if an agency chooses the

rulemaking path when it could have chosen a different path, it may be excused

from complying with applicable rulemaking procedures. Situations may arise

in which an agency chooses to announce policy through a rule even though the

agency could have used the contested case process. If the agency chooses to

announce a rule, it must act consistently with the APA in doing so.

Cite as 371 Or 673 (2023) 691

of law permitted the sanction. See id. at 321 (“No such rule

having been made to proscribe the kind of conduct charged

against petitioner, there was no legal ground on which to

revoke his license.”). In short, Megdal held that the statute

in question delegated a policymaking function to the board,

which could not be exercised in the first instance through

adjudication.

Two years after Megdal, this court decided Ross v.

Springfield School Dist. No. 19, 294 Or 357, 657 P2d 188

(1982), a teacher discipline case. After being terminated

from the Springfield School District, the petitioner sought

review by the Fair Dismissal Appeals Board (FDAB) under

ORS 342.905, which affirmed the dismissal. Id. at 359.

Before this court, the petitioner argued that “prior rulemak-

ing pursuant to the [APA] is required under [Megdal] before

the FDAB may engage in adjudication in individual cases.”

Id. at 367. We disagreed, explaining that Megdal involved

statutory terms of “delegation,” whereas FDAB’s statu-

tory authority was merely “interpretive.” Id. We concluded,

“When applying terms of complete legislative expression,

an agency may interpret statutory standards either by an

interpretive rule or by order in a contested case.” Id. at 368-

69 (emphases added).

In Trebesch, we further refined the analysis for

determining whether prior rulemaking was required. In

that case, the claimant was denied unemployment benefits

based on the agency’s determination that the claimant had

not fulfilled the statutory requirement of a “systematic and

sustained effort to obtain work.” 300 Or at 266. On judicial

review, the claimant argued that the Employment Division

was required to have promulgated a rule defining that stat-

utory phrase before using it as a basis to deny benefits in

an individual case. The claimant argued that the phrase

was “unavoidably delegative,” id. at 269, such that rulemak-

ing was required under Megdal. The agency relied on Ross,

arguing that the agency’s role was limited to interpreting

the phrase. Trebesch, 300 Or at 269-70.

Although that dichotomy had its origins in

Megdal and Ross, we explained that the analysis was more

nuanced—whether rulemaking was required could not be

692 PNW Metal Recycling, Inc. v. DEQ

determined solely by characterizing the statutory term as

delegative or not:

“[C]ategorizing a statutory term for purposes of the scope

of judicial review does not by itself compel a particular con-

sequence with regard to rulemaking.

“* * * * *

“Megdal does not mean that all terms delegating pol-

icymaking discretion can be applied only after rulemak-

ing. Nor does Ross mean that terms delegating interpretive

responsibility may always be applied as the agency chooses,

either by rule or by adjudication. Both cases address only

the requirement for rulemaking in the individual agencies

at issue in the cases.

“It is always possible for the legislature explicitly to

require an agency to define any type of statutory term by

rulemaking. * * * In the absence of an explicit directive, the

breadth and kind of responsibility delegated to the agency

by the statutory term (fact-finding, applying an ambigu-

ous law, or developing policy) will be one, but not a dispos-

itive, factor which may indicate an implicit directive from

the legislature for rulemaking. In addition, the tasks the

agency is responsible for accomplishing, and the structure

by which the agency performs its mandated tasks, all of

which are specified in an agency’s authorizing legislation,

must be examined as a whole in order to discern the legis-

lature’s intent with regard to rulemaking.”

Trebesch, 300 Or at 269-70. Trebesch held, in short, that

whether an agency is required to take action through

rulemaking as opposed to another path is a function of how

the legislature intended for that agency to perform the task

in question, as reflected in the agency’s enabling statutes.

We applied the Trebesch analysis three years later

in Forelaws on Board v. Energy Fac. Siting Council, 306 Or

205, 760 P2d 212 (1988). That case presented the question

whether the Energy Facility Siting Council (EFSC) had

lawfully determined that a company’s industrial waste

was not “radioactive waste” under ORS 469.300(17). Id. at

207. By rule, EFSC had defined “thresholds of radioactivity

that pose hazards to public health,” and the legislature had

incorporated those standards into the statutory definition

Cite as 371 Or 673 (2023) 693

of “radioactive waste.” Id. at 215. At issue in Forelaws was

EFSC’s application of those statutory standards to “evalu-

ations of radon-222 concentrations.” Id. at 213. EFSC had

announced that application in “interpretive rulings,” and

the petitioners argued that EFSC was required to have done

so through formal notice-and-comment rulemaking. Id. We

explained that “EFSC’s interpretations of [the standard]

are within the APA’s definition of ‘rule,’ and EFSC could

have made these interpretations in rulemaking proceedings

under the APA.” Id. at 213-14. We also observed that, under

ORS 183.355(6),

“an agency may sometimes, in the course of deciding a con-

tested case, state propositions that it also could adopt in

rulemaking proceedings. If an agency is required to adopt

a rule through rulemaking proceedings, that requirement

must be found through an analysis of the specific statutory

scheme under which an agency operates and the nature of

the rule that the agency wishes to adopt.”

Id. at 214 (citing Trebesch, 300 Or at 267). We ultimately

concluded in Forelaws that, although EFSC’s enabling stat-

utes gave the agency “broad authority to set policies,” which

suggested a legislative intent to require rulemaking, the

particular issue in Forelaws involved a narrower question

on which the legislature had already made a complete policy

choice, with EFSC’s role being limited to interpretation. Id.

at 215-16.

In sum, “[w]hether an agency is required to adopt a

policy that qualifies as a ‘rule’ solely by means of rulemak-

ing procedures depends on whether the legislature has

declared that rulemaking is the sole acceptable means of

adopting the particular policy at issue.” Homestyle Direct,

354 Or at 266 (emphasis in original). That determination,

in turn, requires “analysis of the specific statutory scheme

under which an agency operates and the nature of the rule

that the agency wishes to adopt.” Forelaws, 306 Or at 214.

Importantly, the APA itself, including its definition

of “rule,” is of no help in resolving whether the agency must

engage in rulemaking as a predicate for enforcement and

adjudication. As to that question,

694 PNW Metal Recycling, Inc. v. DEQ

“[t]he answer is not found in the constitution, * * * or in a

common law, that is, a judge-made common law of admin-

istrative agencies; nor may it be divined from the state

administrative procedures act, * * * which does no more

than set uniform procedures for state agencies. Rather,

the answer is a matter of statutory interpretation, the rele-

vant statutes being those regulating the particular agency

whose action is challenged. We seek to derive the legisla-

ture’s intent from an analysis of the statutes by which a

particular agency operates. The authorizing statutes will

specify whether rulemaking or adjudication authority, or

both, are delegated to the agency and will indicate the

agency’s tasks, the breadth of the agency’s discretion to

carry out these tasks, and the process by which they are to

be accomplished.”

Trebesch, 300 Or at 267.

The foregoing cases also instruct that, in deter-

mining the legislature’s intent as to whether rulemaking is

required, the nature of the statutory terms being applied is

especially important, though not dispositive. Where a stat-

utory term is delegative and the agency has broad rulemak-

ing authority, that has supported a conclusion that the

legislature intended for the agency to engage in rulemak-

ing. Forelaws, 306 Or at 214. Where an agency’s rulemak-

ing authority is more circumscribed or where a statutory

term calls only for interpretation and application, that has

supported a conclusion that rulemaking was not required,

absent some contrary indication of the legislature’s intent.

Coffey v. Board of Geologist Examiners, 348 Or 494, 502-03,

235 P3d 678 (2010).

We have referred to statutory terms calling for

interpretation and application as either “exact” or “inex-

act” terms, both of which charge an agency with carrying

out the legislature’s complete expression of policy, as com-

pared to “delegative terms,” which “delegate” some level of

policymaking authority to an agency. Springfield Education

Assn. v. School Dist., 290 Or 217, 224-26, 228, 621 P2d

547 (1980). Exact terms “impart relatively precise mean-

ing” and involve agency factfinding. See id. at 223-24 (giv-

ing examples of exact terms as “21 years of age, male, 30

days, Class II farmland, rodent, Marion County”). “Inexact

Cite as 371 Or 673 (2023) 695

terms,” on the other hand, are still a “complete” expression

of policy, but are less precise. Id. at 224. An inexact term

often requires an agency to determine what the legislature

intended by the term, and that determination is a question

of law. Id. In Coffey, we explained that Megdal’s requirement

for rulemaking prior to adjudication had been applied to an

incomplete legislative policy, whereas Coffey presented an

expression of “complete” legislative policy. Coffey, 348 Or at

502-03. That complete legislative policy was expressed as a

list of four sanctions, graduated in severity. Because impos-

ing one sanction from a menu of sanctions was more analo-

gous to interpreting and applying law than to making new

law, no prior rulemaking was required. Id. at 503.

Those cases demonstrate that, when this court has

determined that the legislature intended for an agency to

engage in rulemaking before adjudication, an important

factor has been our conclusion that the statute required the

agency to formulate policy to fill in an incomplete expres-

sion by the legislature. By the same token, when a statute

reflects a complete policy statement by the legislature, such

that the agency’s function has been merely interpretive, that

has been a reason to conclude that the agency could state its

interpretation during enforcement and adjudication without

first promulgating a rule.

E. Summary

With the foregoing principles in mind, we return

to the reasoning by which petitioners argue, and the Court

of Appeals concluded, that DEQ adopted a rule. As noted

above, petitioners do not identify any specific statement or

communication by DEQ as the “rule” but contend, instead,

that the rule consists of DEQ’s internal “decision” to adopt

a new interpretation of the auto-dismantler exception—a

decision that reflects a “discretionary choice” that DEQ

made for “policy” reasons. Necessarily, therefore, petitioners

distinguish DEQ’s decision from an adoption of policy that

an agency may permissibly make in a contested case pro-

ceeding under ORS 183.355(6). Similarly, although it did not

address ORS 183.355(6), the Court of Appeals relied on its

own case law to conclude that DEQ’s new interpretation of

the auto-dismantler exception demonstrated that multiple

696 PNW Metal Recycling, Inc. v. DEQ

interpretations were “reasonable”; and, because the agency’s

new interpretation was not “necessarily required” by the

statute itself, it was therefore a “policy-based decision” and

a “new exercise of agency discretion” that could only occur

through rulemaking. PNW Metal Recycling, Inc., 317 Or App

at 212-13.

Those analyses flow from premises that are flawed.

First, the focus on the fact that DEQ adopted different

interpretations at different times, and on DEQ’s reason for

making the change, is misplaced. Petitioners assume from

the fact that DEQ desired a change in policy that the stat-

ute authorized DEQ to make a discretionary policy choice

and that DEQ had to effectuate that choice in a particu-

lar manner—but neither assumption is necessarily correct.

That the text of a statute is amenable to multiple interpreta-

tions does not mean that an agency has been delegated the

authority to choose among them. Whether that is so depends

on whether the statutory wording is inexact or delegative.

A statute with inexact terms may be subject to alternative

plausible interpretations, but the meaning of those terms is

still a question of law, not agency prerogative. Springfield

Education Assn., 290 Or at 224.

Relatedly, the fact that DEQ interpreted the

auto-dismantler exception differently before and after 2018

does not establish that the statute confers “discretion” on

the agency to make a policy choice. Delegative and inexact

terms both require further interpretive work by an agency,

but only the former entail policymaking. Coffey, 348 Or at

502-03, 508. Thus, although it is true that DEQ adopted dif-

ferent interpretations of the auto-dismantler exception at

different times, it does not follow that the statute confers

discretion on DEQ to make a policy decision. If the statute

contains inexact rather than delegative terms—a question

not addressed by the parties and which we do not resolve

today—then DEQ’s revised interpretation is either correct

or incorrect as a matter of law. And that is so regardless

of whether DEQ had “policy-based” or “regulatory” motives

for revising its interpretation. If a reviewing court were to

conclude that the auto-dismantler exception reflects a com-

plete expression of legislative policy, then DEQ’s current

Cite as 371 Or 673 (2023) 697

interpretation would stand or fall on its merits; neither

DEQ’s reason for adopting it, nor the fact that DEQ previ-

ously interpreted it differently, would be of any moment.

In addition, even assuming that DEQ’s new inter-

pretation of the auto-dismantler exception is fairly char-

acterized as an exercise of delegated policymaking rather

than interpretation of an inexact statutory term—a ques-

tion that, we reiterate, has not been developed and is not

squarely presented here—the legislature did not intend for

rulemaking to be the path for every adoption of policy by

an agency. A conclusion that rulemaking is required must

be based on detailed analysis of the substantive statutory

scheme; the APA does not provide an answer. Trebesch, 300

Or at 267. Petitioners have not developed an argument—

rather, they appear to have assumed—that the statutes

addressing solid waste disposal reflect a legislative intent

that the interpretation and application of the auto-disman-

tler exception must occur through rulemaking rather than

through a contested case as allowed by ORS 183.355(6). That

question is critical, however: If the legislature did not intend

to require rulemaking on that issue, then, under our case

law, the agency is permitted to make its decision through

the contested case process. Although we need not resolve

that question now, we observe that the parties’ apparent

agreement that DEQ lacks rulemaking authority in this

area would seem to cut against a conclusion that the legis-

lature intended to require rulemaking as a prerequisite for

interpreting the auto-dismantler exception.4

F. Petitioners Have Not Identified a “Rule” Subject to Review

Under ORS 183.400

In sum, if DEQ’s decision to reinterpret the

auto-dismantler exception constitutes a rule, it is not for all

the reasons petitioners have argued. Neither the fact that

DEQ has adopted different interpretations nor DEQ’s rea-

son for making the change bears on whether rulemaking

4

Petitioners might argue that the statutory scheme contemplates that the

required rulemaking be done by EQC, the entity that provides policy direction

to DEQ. That may be true; on the other hand, the solid waste disposal statutes

specifically direct DEQ to take certain actions regarding the issuance of permits,

and it is not clear that those directives are conditioned on whether any rules have

been promulgated by EQC. In any event, we need not resolve that issue here.

698 PNW Metal Recycling, Inc. v. DEQ

was required or whether DEQ’s action here was a rule. To

the extent that petitioners contend that a rule challenge

under ORS 183.400 must be available to review an agency’s

policy choice, that view is mistaken for the reasons we have

explained; review of an order in a contested case is another

mechanism. Stripped of those considerations, petitioners’

argument reduces to the proposition that DEQ’s interpretive

choice itself is a “rule” as defined by ORS 183.310, such that

it may be challenged in a proceeding under ORS 183.400.

For several reasons, that proposition is wrong.

Once again, ORS 183.310(9) states that, subject to

exceptions, a rule is “any agency directive, standard, regu-

lation or statement of general applicability that implements,

interprets or prescribes law or policy, or describes the pro-

cedure or practice requirements of any agency[.]” Several

exceptions are of note here. First, ORS 183.310(9)(d) exempts

“[i]ntra-agency memoranda.” Second, ORS 183.310(9)(a)

exempts “internal management directives, regulations or

statements which do not substantially affect the interests of

the public.” Third, ORS 183.310(9)(c) exempts “[d]eclaratory

rulings issued pursuant to ORS 183.410[.]” ORS 183.410

provides that, “[o]n petition of any interested person, any

agency may in its discretion issue a declaratory ruling with

respect to the applicability to any person, property, or state

of facts of any rule or statute enforceable by it.” Such rulings

are reviewable by the Court of Appeals in the same manner

as orders in contested cases. Id.

With those exceptions in mind, along with the other

principles discussed above, we conclude that petitioners have

not identified a rule. As explained earlier in our discussion

of the text of ORS 183.310(9), an agency’s interpretive deci-

sion, standing alone, is an awkward fit with the definition’s

reference to a “directive, standard, regulation or statement.”

Moreover, DEQ has yet to take any action that is “generally

applicable” in the sense meant by ORS 183.310(9). Arguably,

DEQ’s interpretive choice can be thought of as generally

applicable in the sense that DEQ has an apparent intention

to apply it to petitioners and similarly situated entities in the

scrap-metal recycling industry. But in light of the APA as a

whole, “applicable” in this context must require something

Cite as 371 Or 673 (2023) 699

more than an agency’s prospective intent. See Webster’s

Third New Int’l Dictionary 105 (unabridged ed 2002) (defin-

ing “application” as “employment as a means: specific use”).

If DEQ had done nothing more than circulate an internal

agency memo announcing a revised interpretation of the

auto-dismantler exception, that memo would be generally

applicable in the same sense that petitioners urge here, but

it would not be a “rule,” because intra-agency memoranda

are specifically excluded from the definition. Deeming the

“decision” itself to be the rule in that situation would under-

mine the point of the exception that allows the agency to

announce its decision internally. Moreover, it would be pecu-

liar if the interpretive choice reflected in the memo consti-

tuted a rule while the expression of that choice in the memo

did not. By referring to statements, directives, regulations,

or standards of “general applicability” and excluding intra-

agency memoranda and “internal management directives,

regulations or statements which do not substantially affect

the interests of the public,” the definition of “rule” contem-

plates an expression of an agency decision that has “general

applicability” in the sense that it is made operative—i.e., the

agency somehow has communicated the decision in a way

that purports to bind those subject to it.

In addition, if petitioners’ view was correct, that

would frustrate the provisions of the APA making clear that

an agency may use the contested case process to interpret

statutes and adopt policy. An agency’s use of ORS 183.355(6)

as the means to state an interpretive choice will, presum-

ably, be preceded by the choice itself. On that point, peti-

tioners advance a curious argument. They acknowledge that

ORS 183.355(6) allows an agency to interpret a statute in a

contested case proceeding, but they argue that, if the deci-

sion to adopt that interpretation precedes the contested case

proceeding and is made “for policy or regulatory reasons,”

then the action requires rulemaking.

That distinction is untenable. Petitioners seem to

suggest that the APA allows agencies to interpret a statute

or announce policy through the contested case process only

so long as the agency does so without forethought, and with-

out a “policy or regulatory” purpose. That is not a realistic

700 PNW Metal Recycling, Inc. v. DEQ

account of how agencies operate. The APA requires agencies

to give notice to affected parties before beginning a contested

case, ORS 183.413, and we presume that, in the ordinary

course, agencies will decide what a statute means before they

prosecute violations of it. Petitioners’ argument that such a

decision requires rulemaking would nullify the provisions of

the APA that allow agencies to use the contested case pro-

cess for “adoption of a general policy applicable to the case

and subsequent cases of like nature.” ORS 183.355(6).

Finally, petitioners’ argument that an interpretive

choice is a “rule” is difficult to square with a provision they do

not address—ORS 183.310(9)(c), which exempts “declaratory

rulings” from the definition of rule. ORS 183.410, as noted

earlier, allows an interested person to request an agency’s

ruling “with respect to the applicability to any person, prop-

erty, or state of facts of any rule or statute enforceable by

it.” Such a ruling is subject to judicial review—but, signifi-

cantly, in the manner afforded to final orders in contested

cases. ORS 183.410. Just as with ORS 183.355(6), therefore,

an agency’s declaration about a statute’s applicability is not

necessarily reviewable as a rule. That is further evidence

that the agency’s internal decision about how to interpret

the statute—which will necessarily precede any declaratory

ruling under ORS 183.410—is not a rule, either.

For the foregoing reasons, we conclude that an

agency’s interpretive decision is not, itself, a rule, although

the generally applicable expression of such a decision could

be.5 Here, however, DEQ did not communicate its decision to

anyone but petitioners. DEQ’s revised interpretation of the

auto-dismantler exception and its stated intention to require

petitioners to obtain a permit are, at this point, precursors

to DEQ’s initiation of an enforcement action that may lead

to a contested case proceeding.

Judicial review of a final order in a contested case

would present an opportunity for petitioners, should they

5

Petitioners correctly point out that the Oregon APA differs from the fed-

eral Administrative Procedures Act in that regard. The federal APA specifically

exempts “interpretative rules” from rulemaking requirements. 5 USC § 553(b);

Perez v. Mortgage Bankers Ass’n, 575 US 92, 96-97, 135 S Ct 1199, 191 L Ed 2d

186 (2015). The Oregon APA contains no such exemption; on the contrary, the

definition of “rule” encompasses statements that “interpret” law. ORS 183.310(9).

Cite as 371 Or 673 (2023) 701

wish, to argue that DEQ’s revised interpretation of ORS

459.005(8)(b)(D) is incorrect as a matter of law. Alternatively,

petitioners may seek to demonstrate, under the Trebesch

line of cases, that the solid waste disposal statutes reflect

a legislative intent that the agency “promulgate rules in

advance of adjudication,” 300 Or at 267, i.e., that rulemak-

ing is the required path for adopting an interpretation of

the auto-dismantler exception. As yet another alternative,

petitioners may choose to avail themselves of ORS 183.410,

which enables them to request a “declaratory ruling” from

DEQ as to the applicability of the auto-dismantler excep-

tion. Such a ruling would be reviewable in the manner of a

final order in a contested case.

For the foregoing reasons, petitioners have failed to

identify a “rule” subject to challenge under ORS 183.400.

Accordingly, we vacate the Court of Appeals’ decision and

dismiss the judicial review.

The decision of the Court of Appeals is vacated. The

judicial review is dismissed.