# PNW Metal Recycling, Inc. v. DEQ

> Oregon Supreme Court · December 7, 2023

URL: https://www.frixlaw.com/law-library/cases/9908040

## Case

- **Court:** Oregon Supreme Court
- **Decided:** December 7, 2023
- **Precedential status:** Published
- **Opinion:** Opinion
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

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.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9908040. Public record. Not legal advice.