Oregon Newspaper Publishers Ass'n v. Peterson

• Decision Date: 03 June 1966
• Citation: 244 Or. 116,415 P.2d 21
• Parties: OREGON NEWSPAPER PUBLISHERS ASSOCIATION, Inc., Stateman Publishing Company, News Review Publishing Co., Oregonian Publishing Company, and Guard Publishing Company, each an Oregon corporation, Respondents and Cross-Appellants, v. Melvin O. PETERSON, Richard K. Brandis, A .G .McLain, Layke L. Seaton, and Meredith L. Fisher, members of the Oregon State Board of Pharmacy, and the State Board of Pharmacy of Oregon, Appellants.
• Court: Oregon Supreme Court

Page 21

415 P.2d 21

244 Or. 116

OREGON NEWSPAPER PUBLISHERS ASSOCIATION, Inc., Stateman

Publishing Company, News Review Publishing Co., Oregonian

Publishing Company, and Guard Publishing Company, each an Oregon corporation, Respondents and Cross-Appellants, v. Melvin O. PETERSON, Richard K. Brandis, A .G .McLain, Layke

L. Seaton, and Meredith L. Fisher, members of the

Oregon State Board of Pharmacy, and the

State Board of Pharmacy of

Oregon, Appellants.

Supreme Court of Oregon, In Banc.

Argued and Submitted Jan. 31, 1966.

Decided June 3, 1966.

William B. Wyllie, Salem, argued the cause for appellants. On the briefs were Rhoten, Rhoten & Speerstra, Salem.

Keith D. Skelton, Eugene, argued the cause and filed a brief for respondents and cross-appellants.

Before McALLISTER, C.J., and PERRY, SLOAN, GOODWIN, DENECKE, HOLMAN and SCHWAB, JJ.

GOODWIN, Justice.

This is an appeal and a cross appeal from a declaratory decree which struck down an administrative regulation ¹ of the State Board of Pharmacy prohibiting the public advertisement of prescription drugs.

On August 10, 1961, the State Board of Pharmacy adopted the regulation in question. The immediate effect of the regulation was the cancellation by a number of drug stores of advertising which they had placed with the plaintiff newspapers.

Plaintiff newspapers and their trade association opposed the regulation at the administrative level, and, receiving no satisfaction from the Board, attacked the regulation by declaratory proceedings brought under ORS 183.400 (part of the Administrative Procedure Act, ORS 183.010 to 183.510). The Board interposed a catalogue of defenses objecting to the standing of the plaintiffs to sue, the ripeness of the controversy for decision, and the want of a justiciable controversy. The Board also asserted that the question was moot, that the action was barred by sovereign immunity, and, on the merits, that the regulation was a valid exercise of powers granted the Board under ORS 689.620. ²

Each of the foregoing defenses is renewed on appeal. The plaintiffs, in their cross appeal, urge error with reference to the trial court's refusal to invalidate the disputed regulation on First Amendment grounds, and its refusal to rule on the alleged improper administrative procedure by which the Board adopted the challenged regulation.

We agree with the trial court that the controversy was justiciable, and that it was 'ripe' for decision. If the retail druggists instead of the newspaper proprietors were in court challenging the regulation, there would be no serious question of ripeness. An issue is ripe for judicial determination when the interests of the plaintiff are in fact subjected to or imminently threatened with substantial injury. Davis, Administrative Law 394--395 (1959). Oregon Cry. Mfrs. Ass'n v. White, 159 Or. 99, 78 P.2d 572 (1938), is cited for the proposition that a controversy of this character is not ripe for review until some attempt is made to enforce the challenged regulation. Assuming that such a generality may be accurate for some purposes, ³ it is sufficient to point out in the case at bar that the drug stores did cancel their advertising as a direct result of the regulation. The enforcement of the regulation was thereby accomplished. We are satisfied that the controversy now before us was both justiciable and ripe for decision.

Standing presents a more difficult question. It is argued that the plaintiff newspapers have no standing in this case because they are not bound by any of the regulations promulgated by the Board of Pharmacy. ORS 183.400(1) authorizes courts to render declaratory judgments on the validity of administrative rules in certain cases. The section is silent with reference to standing. Since the plaintiffs in the case at bar are not directly involved in a 'contested case,' they do not come within the judicial review provisions of ORS 183.480. If they have any remedy at all, it is available under 183.400.

For the purposes of challenging a rule under ORS 183.400, any person who would be substantially aggrieved by the enforcement of the rule ought to have standing to challenge the rule. What is a 'substantial' interest will be, in close cases, a question of degree. A formula to fit all cases does not exist. See Franzke and May, The Oregon Administrative Procedure Act, 1 Willamette L.J. 233, 263 (1960), and 2 Cooper, State Administrative Law 535, 536 (1965). The standing of an aggrieved person need not depend upon a specific legislative grant of standing. Standing grows out of the allegation of a substantial injury directly resulting from the challenged governmental action. See Pierce v. Society of Sisters, 268 U.S. 510, 45 S.Ct. 571, 69 L.Ed. 1070, 39 A.L.R. 468 (1925). One who alleges that he is or has been adversely and substantially affected by governmental action should have standing to challenge that action if it is judicially reviewable at all. See Davis, Administrative Law, supra at 398.

The standing of these plaintiffs, as bystanders, is complicated by the fact that they are not directly named by, or jurisdictionally answerable to, the agency which made the rule. They may, nonetheless, seek judicial relief if the agency's acts are in fact harmful to their substantial interests. The agency action (the challenged regulation) produced an immediate economic effect upon the plaintiffs when it induced the drug stores to cancel their advertising contracts. We believe the plaintiffs have shown an injury to a substantial interest. They have standing to challenge the regulations under these circumstances. To like effect, see American Can Co. of Massachusetts v. Milk Control Board, 313 Mass. 156, 46 N.E.2d 542 (1942) (container-manufacturer's challenge of a regulation placing a punitive price differential on milk sold in paper containers).

The Board next contends that after its challenged regulation was promulgated, the enactment by Congress of 76 Stat. 791 (1962), 21 U.S.C. § 352(n) (1964), which requires the disclosure of certain technical information in all prescription-drug advertising, renders the present controversy moot. While it may be true that the canceled advertising could not now be printed without modification to include federally required information, this fact does not render the issue moot. The Board's regulation purports to prevent all such advertising, including that which might satisfy federal requirements.

The Board next contends that the present suit, which attempts to stop governmental action, is barred by sovereign immunity. Since, as we interpret ORS 183.400, the legislature has consented to allow exactly this sort of challenge, we may summarily reject the Board's reliance upon immunity. For a critical discussion of the doctrine of governmental immunity as a ground for denying judicial review, see Byse, Nonstatutory Judicial Review, 75 Harv.L.Rev. 1479, 1484 (1962).

The role of judicial review of the exercise of delegated legislative powers has not been uniformly defined in our decisions, but our more recent cases indicate that the range of issues open to review is narrow. See Parker, Coutours of Administrative Law, 1 Willamette L.J. 145, 159 (1960). Only questions of constitutionality, statutory authority, and basic prerequisites of proof can be raised. Angelos v. Board of Dental Examiners, Or., 414 P.2d 335 (May 18, 1966).

On the merits, the critical issue is whether the authority of the Board to promulgate regulations under ORS 689.620(1) and (2) is sufficiently broad to include the regulation of advertising.

In the interest of public health, the Legislative Assembly presumably could enact statutes concerning the public promotion and advertisement of poisons and dangerous drugs. ⁴ the United States Congress has done so, as noted above. That the sale of such drugs is intimately involved with public health and safety is not denied. If we assume that the Assembly has the power itself to regulate, or even to proscribe altogether the public advertising of dangerous drugs, it could also, with proper safeguards, delegate that power to an agency of its own creation. The question is, has the Assembly by ORS 689.620 authorized the Board of Pharmacy to regulate advertising? We hold that it has not.

In the absence of a statute ⁵ which grants a presumption of validity to administrative regulations, an administrative agency must, when its rule-making power is challenged, show that its regulation falls within a clearly defined statutory grant of authority. Safeway Stores v. State Bd. of Agriculture, 198 Or. 43, 71, 255 P.2d 564 (1953); and see, for cases elsewhere, 1 Cooper, State Administrative Law, supra at 252. The reason behind this rule is that the people, by adopting the state constitution, conferred upon the Legislative Assembly the power to legislate. Therefore this power is not by implication to be delegated to nonelective officers. The tendency of administrators to expand the scope of their operations is perhaps as natural as nature's well-known abhorrence of a vacuum. But no matter how highly motivated it may be, the tendency to make law without a clear direction to do so must be curbed by the overriding constitutional requirement that substantial changes in the law be made solely by the Legislative Assembly, or by the people. ⁶ Oregon Constitution, Art. IV, § 1. Accordingly, unless ORS 689.620 can be said to be a delegation to the Board of Pharmacy of the power claimed by the Board in this case, the power does not exist.

Nothing in ORS 689.620 or elsewhere in the same chapter suggests that advertising was contemplated as a proper subject of regulation. The sale of certain chemicals for human consumption may be regulated, but the law is silent upon the manner in which such merchandise may be advertised.

We note, by examining the chapter on the practice of dentistry, ORS 679.010 to 679.991, that the control of advertising is specifically covered by 679.140. W...