PNW Metal Recycling, Inc. v. DEQ

PNW Metal Recycling, Inc. (PNW) initiated a rule challenge under ORS 183.400(1). PNW claimed DEQ’s decision to “reinterpret one of its governing statutes” was a rule and that it was invalid because DEQ lacked “rulemaking authority on th[e] subject” and “did not conduct formal rulemaking procedures.” DEQ argued that their interpretation was to comport with legislative intent, that the “new interpretation [was] not ‘generally applicable,’” and that there was no “official document” embodying the “purported rule.” Under Smith v. TRCI, 259 Or App 11 (2013) and ORS 183.310(9), an agency directive is a “rule” if it is “(1) of ‘general applicability’ and (2) not ‘necessarily required’ by a statute or validly promulgated rule.” The Court found that ORS 459.005(8), the interpretation of which is at issue, has two reasonable interpretations such that DEQ’s “most recent interpretation is not ‘necessarily required’ by the statute.” The Court reasoned that because the interpretation was not “necessarily required,” the “change [in] interpretation [was] a ‘new exercise of agency discretion’ which must be promulgated as a rule to be valid.” In addition, the Court found that DEQ intended to apply the interpretation to “all scrap metal recyclers in Oregon,” and not just PNW and one other company. Finally, the Court stated that an agency “cannot evade formal rule making requirements merely by failing to memorialize [‘a generally applicable, policy-based decision’] in writing.” DEQ’s challenged rule held invalid.