The Oregon Real Estate Agency is invested with various authorities and powers through law. Specifically, under ORS 696.385, the agency has the power to “make and enforce rules as necessary to administer and enforce the provisions of, and enforce and discharge the duties defined in, any law with the administration or enforcement of which the agency is charged.” To dig into what that means, consider OAR 863-025-0090, the rule that lays out how long a property manager has to get ready for a client’s trust account reconciliation review after receiving notice from OREA. In March of 2022, OREA filed notice to amend various parts of the administrative rule chapter under the caption of “housekeeping changes.” OAR 863-025-0090 was changed so that the “30 days after OREA gives notice” timeline became what we now have – 10 days to review after the agency gives notice. The agency pointed to ORS 696.385 as the “statutory authority” (reason why they are allowed to make that change to OAR 863-025-0090), and equally pointed to ORS 696.280 as the reasoning for the modification. ORS 696.280 lays out recordkeeping requirements for property managers and says “records maintained under this section must at all times be open for inspection by the Real Estate Commissioner or the commissioner’s authorized representatives.” The same March 2022 rulemaking cited 2017’s SB 67 as the reason for the housekeeping changes. SB 67 modified ORS 696.245(2) and (3) to lay out a 10 day timeframe to notify the agency when an account was closed, transferred, or opened. In other words, OREA’s purpose when rulemaking was to align the reconciliation review timelines in OAR 863 more closely with 2017’s SB 67 modification to ORS 696. It is worth noting that nowhere in ORS 696 is there any reference to a reconciliation review, so the agency took a statute that assigned notice requirements on client trust accounts, mixed in a statutory requirement that they be allowed to inspect records, and made use of its rulemaking power to modify OAR 863 timelines so things fit together better.
In essence, OREA takes legislation and uses it to guide the changes to administrative rules, aiming to align the legislative required changes with the more fiddly or irregularly sized parts of the administrative rules. For lack of a better description, an agency is in charge of providing rules that fill in the gaps and holes where legislation has not provided absolute clarity. Legislation tends to use a broad brush to solve problems, and agencies scramble to do detail work in the swishing wake of the legislature’s broad brush stroke. Regularly, the optimistic language of legislation fails to reflect the realities on the ground.
While the case no longer has the cachet it once did, Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. 467 U.S. 837 (1984) is a wonderful illustration of an agency’s authority to wiggle around in the gray zone of a statute. In 1977, the Clean Air Act of 1963 got an amendment that required building projects with “sources” of air pollution go through a new review process. The review process could potentially result in expensive mitigation requirements if too much air pollution was created. The EPA of 1977 interpreted “source of air pollution” to mean any single building or creation that released air pollution; hence building a single air polluting structure would necessitate new review. If a massive power plant complex added a smokestack to a single building, that always required a new review. When Ronald Reagan took the presidency, the Reagan EPA decided that “source of air pollution” meant the whole plant or factory. If a massive power plant complex added a smokestack to one building, but took down a smokestack elsewhere, there was no “source of air pollution” because the net outcome was level and therefore no special review or mitigation was required. Chevron resulted in a legal deference standard that was ended by the Supreme Court in 2024, but the logic and application of the case to this week’s tip remains – the legislature will oftentimes throw out a word that has no further definition or will throw out a procedure that doesn’t map to the industry and it belongs to the agencies to find the golden thread between legislative intent and practical application.
Informally, there tend to be a handful of philosophies attributed to administrative rulemaking, but the three main conceptual approaches are:
- (1) PROACTIVE AGENCY APPROACH: The agency’s role is to proactively effectuate the intent of the legislature when making rules even if not directed by the legislature to modify rules [e.g., above OAR 863-025-0090 and OAR 863-015-0092 modifications from 2022]
- (2) INDEPENDENT AGENCY APPROACH: The agency’s role is to take a law directing rule changes and maneuver the outcome of rulemaking to further the agency’s goals or enabling statute [e.g. a 2024 law said the Department of Environmental Quality’s rules must consider environmental impact and cost to consumer when granting permits to repair septic systems. Rulemaking resulted in a rule that directly considers environmental impacts, but only indirectly considers cost to consumer. Likely not the intent of the legislature, but maps closely to the prime directive of DEQ. More can be seen at https://www.oregon.gov/deq/rulemaking/Pages/Onsite2025.aspx]; and
- (3) LIMITED DISCRETION APPROACH: The agency’s role is to take the literal words of a law and to effectuate the minimum amount required to meet the exact specifications in the law [e.g., Heckler v. Chaney, 470 U.S. 821 (1985). Texas inmates took the stance that lethal injection drugs were not approved by the FDA as “safe and effective” for lethal injection, and the FDA refused to look into the “unapproved use of approved drugs” on the grounds that the FDA’s enforcement proceedings are only initiated where there is a “serious danger to the public health or a blatant scheme to defraud,” and the use of approved drugs in an unapproved way to perform a state-sanctioned lethal injection was not seen by the agency as a risk to public health. I.e., the agency punted the case and punted their enforcement requirement based on a specific, literalist reading of the statute].