Independent Contractors Research Institute v. Department of Administrative Services

139 P.3d 995, 207 Or. App. 78, 2006 Ore. App. LEXIS 1071
CourtCourt of Appeals of Oregon
DecidedJuly 26, 2006
DocketA123407
StatusPublished
Cited by3 cases

This text of 139 P.3d 995 (Independent Contractors Research Institute v. Department of Administrative Services) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Independent Contractors Research Institute v. Department of Administrative Services, 139 P.3d 995, 207 Or. App. 78, 2006 Ore. App. LEXIS 1071 (Or. Ct. App. 2006).

Opinion

*81 SCHUMAN, P. J.

Petitioners challenge the validity of rules promulgated by the Department of Administrative Services (DAS) to implement the Products of Disabled Individuals Act (PDIA), ORS 279.835 to 279.855. In their eight assignments of error, petitioners argue that the fiscal impact statement accompanying the new rules was inadequate and that several of the rules create policies that are not authorized by the PDIA. We hold that the rules are valid.

The key provision of the PDIA requires public agencies to purchase products and services from nonprofit providers, outside of the competitive bidding process that normally governs public contracting, if the provider is a nonprofit agency employing disabled individuals. 1 The purpose of the PDIA is “to encourage and assist disabled individuals to achieve maximum personal independence through useful and productive gainful employment by assuring an expanded and constant market for sheltered workshop and activity center products and services * * *.” ORS 279.840. In order to participate in the program, the nonprofit agency must be “operated in the interest of disabled individuals” and not provide benefits to shareholders or others; it must comply with state occupational health and safety standards; and it must “employ! ] disabled individuals for not less than 75 percent of the work hours of direct labor required for the manufacture or provision of the products or services.” ORS 279.835(5)(a) - (c). Such an agency is deemed a “[q]ualified nonprofit agency for disabled individual[s],” id,., also known as a “qualified rehabilitation facility” or “QRF.”

*82 For implementation and administration of the PDIA, and in particular for specifying appropriate products, services, prices, and providers, the legislature turned to DAS. ORS 279.845. 2 Once a product or service is listed by DAS as available through a QRF, any public agency seeking to procure that product or service must do so from the listed QRF at the price established by DAS. ORS 279.850(1).

In 1981, DAS promulgated a “temporary” rule to administer the program created by the PDIA. OAR 125-30-015 (1981). That rule, repeatedly readopted but never “permanent,” remained in effect until 2003, when DAS promulgated the rules being challenged in this proceeding. The new rules, OAR 125-055-0005 to 125-055-0045, became effective on September 8, 2003. 3 Petitioners, a coalition of businesses and nonprofit trade and employer associations, filed the present petition challenging the rules. ORS 183.400(1).

We have authority to invalidate an agency rule only if we find that it “[vfiolates constitutional provisions”; “[e]xceeds the statutory authority of the agency”; or “[w]as adopted without compliance with applicable rulemaking procedures.” ORS 183.400(4)(a) - (c); Planned Parenthood Assn. v. Dept. of Human Res., 297 Or 562, 565, 687 P2d 785 (1984). Petitioner’s first assignment of error, contending that DAS *83 filed an inadequate fiscal and economic impact statement, asserts a procedural flaw. The remaining assignments deal with what petitioners argue are rules that exceed the rule-making authority conferred on DAS by the PDIA. We begin with the procedural issue.

With every notice of intended rulemaking, an agency must provide:

“A statement of fiscal impact identifying state agencies, units of local government and the public which may be economically affected by the adoption, amendment or repeal of the rule and an estimate of that economic impact on state agencies, units of local government and the public. In considering the economic effect of the proposed action on the public, the agency shall utilize available information to project any significant economic effect of that action on businesses which shall include a cost of compliance effect on small businesses affected.”

ORS 183.335(2)(b)(E). The fiscal impact statement that DAS published with the notice of rulemaking states:

“Information is not available that would permit the Department of Administrative Services to quantify, in terms of dollars, the fiscal impact of the adoption of these rules on state agencies, units of local government, and the public. However, the addition of an express rule requirement (now observed in practice) that QRFs submit annual re-applications to participate in the program would increase QRF costs by requiring them [to] submit reapplications — costs that will vary with [the] organization’s size and the range of its products and services. Section 4 of the rules (which would substantially continue the application of temporary rule provisions adopted on September 27, 2002 (OAR 125-030-0015(5) (temporary)) would provide more specific standards for determining whether products and services of the disabled are suitable for procurement by public agencies, thus making suitability simpler to apply for and to evaluate, which should afford some savings to the department and QRFs. However, a requirement that QRFs submit a ‘written plan’ when asking for suitability decisions (carried over from the temporary rule) will add QRF costs that will vary with the nature and scope of the product or service. QRF annual audit costs are not expected to increase, but new authority to require non-compliant QRFs *84 to submit quarterly audits will increase expenses of the affected QRFs by the cost of those audits.
“State agencies and local governments who purchase products or services of the disabled may experience modestly increased costs of these items because the new rules would expressly permit QRFs to recover the costs of their annual audits through their prices under [ORS] 279.845(l)(a) (section 8(9)). Under [OAR] 125-055-0035, new requirements that residential programs and public benefit corporations must submit documentation of their qualifications to make purchases under the program will increase their expenses by. the cost of making those submissions.

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Cite This Page — Counsel Stack

Bluebook (online)
139 P.3d 995, 207 Or. App. 78, 2006 Ore. App. LEXIS 1071, Counsel Stack Legal Research, https://law.counselstack.com/opinion/independent-contractors-research-institute-v-department-of-administrative-orctapp-2006.