City University v. Office of Educ. Policy

870 P.2d 222, 126 Or. App. 459, 1994 Ore. App. LEXIS 251

• Court: Court of Appeals of Oregon
• Decided: February 23, 1994
• Docket: 88C-11645; CA A70734
• Status: Published

Opinions

EDMONDS, J.

The State of Oregon appeals from a declaratory judgment that held ORS 348.835(2)(c) unconstitutional under the Commerce Clause¹ and struck the word “Oregon” from the statute in order to preserve it. We modify the judgment.

Plaintiff filed this declaratory action seeking a declaration that ORS 348.835(2)(c) is unconstitutional and an injunction prohibiting defendants from applying the statute and the rules promulgated under it to plaintiff. ORS 348.835 provides:

“(1) No school or other institution of learning shall confer or offer to confer any degree upon any person, in recognition of the attainment or proficiency of such person, in pursuing or graduating from any course conducted by it, without first having submitted the requirements for such degree to the Oregon Office of Educational Policy and Planning and having obtained the approval of the director.

“(2) ORS 348.830 to 348.885 shall not apply to:

“(a) Any school or institution of learning which has been established and conducted within this state, and has conferred degrees for a period of 15 years prior to March 4, 1935;

"(b) Any school conducted under the public educational system of the state;

“(c) Any Oregon school which is a member in good standing of the Northwest Association of Schools and Colleges; or

“(d) Schools of theology operating on a post-baccalaureate degree level.”

The trial court ruled in favor of plaintiff. It said:

“[ORS 348.835(2)(c)] is clearly not a neutral statute. It is a discriminatory statute whose purpose is to affect educational institutions which have their [sic] main offices and branches out-of-state. Those things which this statute attempts to protect Oregon citizens from can just as easily be caused by existing in-state institutions. This statute puts an additional burden upon the plaintiff herein in continuing to have their programs offered in the [S]tate of Oregon. Based upon the testimony offered, and this Court’s purview of the administrative rules, there is no doubt but that they are a substantial and additional burden to out-of-state schools which are not required of in-state institutions. This statute is not neutral and, therefore, this Court will, under the interstate commerce clause, rule it unconstitutional.”

In Lewis v. BT Investment Managers, Inc., 447 US 27, 36, 100 S Ct 2009, 2015, 64 L Ed 2d 702 (1980), the Supreme Court pointed out that the limitation on state regulatory power imposed by the Commerce Clause “is by no means absolute” and the “[s]tates retain authority under their general police powers to regulate matters of ‘legitimate local concern,’ even though interstate commerce may be affected.” The Court has defined two classes of state statutes that burden interstate transactions. In the first group are statutes that burden interstate commerce incidently. Such statutes violate the Commerce Clause only if the burdens they impose on interstate trade are “clearly excessive in relation to the putative local benefits.” Pike v. Bruce Church, Inc., 397 US 137, 142, 90 S Ct 844, 847, 25 L Ed 2d 174 (1970). In the second group are statutes that discriminate against interstate commerce on their face. Those statutes violate the Commerce Clause unless the state demonstrates that (1) ‘ ‘the statute ‘serves a legitimate local purpose’ and [(2)] that this purpose could not be served as well by available nondiscriminatory means.” Maine v. Taylor, All US 131, 138, 106 S Ct 2440, 2447, 91 L Ed 2d 110 (1986) (quoting Hughes v. Oklahoma, 441 US 322, 336, 99 S Ct 1727, 1736, 60 L Ed 2d 250 (1979)). The purpose of the statutory scheme of ORS 348.830 to ORS 348.885 is expressed in ORS 348.830:

“It is the purpose of ORS 348.830 to 348.885 to provide for the protection, education and welfare of the citizens of this state, its educational institutions and its students. The Oregon Office of Educational Policy and Planning shall adopt by rule minimum standards concerning quality of education, ethical and business practices, health and safety and fiscal responsibility, and protecting against substandard, transient, unethical, deceptive or fraudulent practices. The standards shall apply to schools and institutions subject to ORS 348.835 and shall be developed in consultation with an appropriate agency.”

ORS 348.835 subjects academic degree programs offered in Oregon to regulation by the Office of Educational Policy and Planning (OEPP). ORS 348.835(2)(c) provides that Oregon schools and colleges that are members in good standing of the Northwest Association of Schools and Colleges (NASC) are exempt from the certification requirements that non-Oregon schools and colleges must meet in order to conduct business in Oregon regardless of whether they are members of NASC.

OEPP is a state agency created under ORS 348.715. Its function is to review and evaluate post-secondary programs and to propose new post-secondary locations consistent with statewide policy and program objectives. See ORS 348.715(4)(d). In addition, OEPP approves new degree programs offered in Oregon until they are accredited by NASC. NASC conducts accrediting activities in seven northwestern states under the auspices of the Council on Post-Secondary Accreditation and the U. S. Secretary of Education. Its standards do not differentiate between schools located in one state and those in another state. It accredits an institution as a whole and not on a site-by-site basis. Branch campus locations are called “secondary sites.”

Plaintiff is a nonprofit Washington corporation that operates a privately owned university. Its administrative headquarters are based in Washington and one of its branch campus facilities is located in Tigard. Plaintiff was accredited in 1978 by NASC, and its accreditation was renewed in 1990. The record indicates that plaintiff began offering courses in Tigard in 1977.

Until new degree programs are fully accredited by NASC, OEPP applies the same review criteria to Oregon schools and non-Oregon schools with secondary sites in Oregon. It reviews on a three-year cycle. Accreditation by NASC ordinarily takes approximately six years. After NASC accreditation, OEPP continues to review the secondary sites of non-Oregon schools every three years, but pursuant to ORS 348.835(2)(c), it is not required to review under ORS 348.830 to ORS 348.885 Oregon schools that are in good standing with NASC. According to a witness, Oregon schools are subject to a different set of controls, and OEPP continues to work with other agencies to remedy educational deficiencies in Oregon schools’ programs. Once accreditation occurs, NASC rules require that an institution be reviewed every five years.

It is clear that the statute discriminates against non-Oregon schools on its face, because it requires them to comply with accreditation requirements that are not imposed on Oregon schools. However, that fact alone does not mean that the statute impermissibly interferes with interstate. commerce. A statute that discriminates against interstate commerce may be constitutional if it serves a legitimate local purpose and the purpose cannot be served as well by available nondiscriminatory means. See, e.g., Maine v. Taylor, supra.2

One of the ways to determine whether the statute serves a legitimate local purpose is to look at the express purpose of the statute and the underlying legislative history. The bill that resulted in ORS 348.835(2)(c) was sponsored by the Committee on Education at the request of OEPP. The problem that the sponsor wished to address with the bill was that out-of-state institutions, although accredited by NASC, were not under the degree granting authority of OEPP and, therefore, were not subject to its review. The sponsor believed that all educational institutions offering degrees within the state should be scrutinized. A witness explained:

“We can review the program they’re offering in Oregon and assure that it is of equivalent quality to the same kinds of programs that our Oregon public institutions and Oregon private institutions maybe offering.” Minutes, House Education Committee, May 18, 1979, p 3.

Another witness testified:

“Without some kind of check on an institution, the Commission has no idea as to the extent of their offerings, the kind of physical facilities they’re in, what kind of instructors they’re using, what kind of library services they’re able to provide.” Minutes, House Education Committee, May 18, 1979, p 4.

Another witness testified that the lack of state supervision was a national problem and cited examples of a Colorado school that was offering Doctor of Education degrees in Oregon, which could be obtained by spending less than a week at the Colorado campus. In her experience, she had encountered several examples of multiple course offerings in states from otherwise accredited institutions in other states that lacked in-state faculty. The executive director of the Independent Colleges Association of Oregon testified that the bill would fill a loophole in the existing law, and would provide protection for Oregon students. Here, even when one looks beyond the legislature’s characterization of the need for the statute, it is clear that ORS 348.835(2)(c) was enacted to protect Oregon consumers from the effects of substandard, transient, unethical, deceptive or fraudulent practices by out-of-state educational institutions, and that it meets the “legitimate local purpose” requirement.

The burden is on defendants to offer evidence that the purpose cannot be served as well by available nondiscriminatory means. Defendants argue that the trial court prevented them from offering evidence on the issue when it sustained objections made by plaintiff at trial on the basis of the lack of relevancy. Any evidence having a tendency to make it more likely that the statute serves a legitimate local purpose and that the purpose could not be served as well by available nondiscriminatory means was relevant. See OEC 401; OEC 403. However, the trial court did permit defendants to make offers of proof. The evidence offered through the offers of proof was relevant and admissible, and therefore we consider it in determining the issue.

The evidence offered by defendants through their offers of proof is insufficient to carry their burden in this regard. Although defendants suggested, in their opening statements and in their argument to the court, that the NASC accreditation policies were inadequate because they did not provide for review on as frequent a basis as does the statute and because they did not provide for visitation of facilities located in Oregon, they proffered no evidence that those deficiencies could not be remedied by statutes or rules that were nondiscriminatory. In the light of the inadequacy of defendants’ evidence, the trial court did not err in holding that ORS 348.835(2)(c) is unconstitutional.

Finally, defendants assign error to the court’s remedy. They argue that ORS 348.835(2)(c) should be invalidated in its entirety, rather than simply severing the word “Oregon” from the provision. If defendants are correct, then plaintiff will continue to be regulated by OEPP. If they are incorrect, then plaintiff is exempt from regulations under ORS 348.830 to ORS 348.885. A statute as a whole need not be invalidated if those portions that have been found unconstitutional are severable from what remains. The severability of unconstitutional portions of a statute is governed by ORS 174.040, which provides:

“It shall be considered that it is the legislative intent, in the enactment of any statute, that if any part of the statute is held unconstitutional, the remaining parts shall remain in force unless:

“(1) The statute provides otherwise;

“(2) The remaining parts are so essentially and inseparably connected with and dependent upon the unconstitutional part that it is apparent that the remaining parts would not have been enacted without the unconstitutional part; or

“(3) The remaining parts, standing alone, are incomplete and incapable of being executed in accordance with the legislative intent.”

Nothing in the text of ORS 348.835 provides that, if any part of that statute were held to be unconstitutional, the remaining parts should not remain in force. See ORS 174.040(1). ORS 348.830 et seq expresses the public interest in regulating educational institutions operating in Oregon. As the legislative history demonstrates, ORS 348.835(2)(c) was enacted with the express intention of regulating non-Oregon schools but exempting certain Oregon schools. To sever the word “Oregon” from the statutory exemption would result in non-Oregon schools being exempt from regulation, contrary to the express intention of the legislature. The word “Oregon” is not only inseparably related to the remaining language in ORS 348.835(2)(c); its addition was the reason for the 1979 amendment to the subsection. Under these circumstances, ORS 174.040 does not permit us to sever it from the statute in order to render it constitutional. Defendants are correct that ORS 348.835(2)(c) must be invalidated in its entirety.

Defendants’ other assignments of error do not require discussion.

Judgment modified to declare ORS 348.835(2)(c) unconstitutional in its entirety; otherwise affirmed.

1 Article I, section 8, clause 3, of the United States Constitution provides that Congress shall have the power ‘Ttlo regulate Commerce * * * among the several States!.]”

2 In Maine v. Taylor, supra, the Court upheld the constitutionality of a Maine statute that prohibited the importation of live bait fish into Maine, on the basis that the statute served a legitimate local purpose and that the purpose could not be served as well by available nondiscriminatory means. Taylor, a Maine resident, arranged to have 158,000 live golden shiners, a species of minnow, delivered to him from outside the state. He was charged with violation of a federal law that made it unlawful to import fish in violation of a state law. The Supreme Court concluded that Maine’s import ban discriminated against interstate trade on its face, but not impermissibly.