Trebesch v. Employment Div.

• Decision Date: 28 January 1986
• Docket Number: AB-586A
• Citation: 300 Or. 264,710 P.2d 136
• Parties: Roland I. TREBESCH, Respondent on Review, v. EMPLOYMENT DIVISION, Raymond P. Thorne, Assistant Director, DHR, Petitioner on Review. CA A28498; SC S30900; EAB 83-
• Court: Oregon Supreme Court

Page 136

710 P.2d 136

300 Or. 264

Roland I. TREBESCH, Respondent on Review, v. EMPLOYMENT DIVISION, Raymond P. Thorne, Assistant Director DHR, Petitioner on Review.

CA A28498; SC S30900; EAB 83-AB-586A.

Supreme Court of Oregon In Banc.

Argued and Submitted Nov. 8, 1984.

Decided Nov. 26, 1985.

Reconsideration Denied Jan. 28, 1986.

Philip Schradle, Asst. Atty. Gen., Salem, argued the cause for petitioner on review. With him on the brief were Dave Frohnmayer, Atty. Gen., James E. Mountain, Jr., Sol. Gen., Michael D. Reynolds, Asst. Atty. Gen., and Judith Tegger, Asst. Atty. Gen., Salem.

Michael Marcus, Legal Aid Service, Portland, argued the cause for respondent on review. With him on the brief was Terri K. Borchers, Legal Aid Service, Portland.

ROBERTS, Judge.

The issue is whether the Assistant Director of the Employment Division was required to promulgate a rule defining the statutory phrase "systematic and sustained effort to obtain work" before it could deny claimant extended unemployment benefits for failing to fulfill the statutory requirement.

An individual is, by statute, ineligible for extended unemployment benefits if the individual failed "actively [to] engage in seeking work." ORS 657.325(6)(b). An individual, by statute, will be treated as "actively engaged in seeking work" if "[t]he individual has engaged in a systematic and sustained effort to obtain work," and furnishes tangible proof of such effort. ORS 657.325(10).

The initial decisionmaker in the Employment Division denied benefits. The administrative decision contained a "Conclusions and Reasons" section which stated: "Your work search was not a systematic and sustained effort to obtain employment. You did not actively seek work." Beyond this recitation of the statutory language no rationale appears. Finding of Fact Number 4, which provides the only clue to the decision, states: "Your only contacts were your union and two employers." The referee adopted the finding and conclusions of the initial decisionmaker and affirmed the denial of benefits. The Employment Appeals Board (EAB) affirmed as well and adopted the referee's decision. The EAB reached its decision over one member's dissent. The dissenter would have allowed benefits because the assistant director of the Employment Division had not promulgated a rule defining the statutory term. ¹

The Court of Appeals accurately identified an "absence of a demonstrably reasoned conclusion" in the EAB's order, 68 Or.App. 464, 467, 683 P.2d 1018 (1984), but it did not decide the case on this ground. ² The Court of Appeals reversed and remanded the case, stating that the agency had the "responsibility to give fair notice of what the term 'systematic and sustained effort to obtain work' means." 68 Or.App. at 470, 683 P.2d 1018.

1. Determining when rulemaking is required.

We are called upon to consider whether the responsible officials in the Employment Division are required to promulgate rules in advance of adjudication. The answer is not found in the constitution, Anderson v. Peden, 284 Or. 313, 327, 587 P.2d 59 (1978), ³ or in a common law, that is a judge-made law of administrative agencies; nor may it be divined from the state administrative procedures act, ORS 183.310 to 183.725, which does no more than set uniform procedures for state agencies. Rather, the answer is a matter of statutory interpretation, the relevant statutes being those regulating the particular agency whose action is challenged. We seek to derive the legislature's intent from an analysis of the statutes by which a particular agency operates. The authorizing statutes will specify whether rulemaking or adjudication authority, or both, are delegated to the agency and will indicate the agency's tasks, the breadth of the agency's discretion to carry out these tasks, and the process by which they are to be accomplished. Judicial decisions may present the methodology by which we examine the question of required or permissive agency rulemaking. Nonetheless, only the statutes regulating a particular agency will provide the answer.

The arguments of the parties in this case illustrate a common confusion. The parties frame their positions in terms of judicial decisions rather than the statutes regulating administration of the unemployment insurance laws, ORS chapter 657. As a further complication, the parties cite four of this court's decisions interchangeably, though the cases addressed different concerns. Two considered the scope of judicial review of agency action, McPherson v. Employment Division, 285 Or. 541, 591 P.2d 1381 (1979) and Springfield Education Assn. v. School Dist., 290 Or. 217, 621 P.2d 547 (1980). The third, of direct relevance to the instant question, addressed the requirement for agency rulemaking in advance of adjudication, Megdal v. Board of Dental Examiners, 288 Or. 293, 605 P.2d 273 (1980). The fourth case briefly addressed the need for prior rulemaking, Ross v. Springfield School Dist., 294 Or. 357, 657 P.2d 188 (1982).

The assistant director of the Employment Division apparently believes that Springfield Education Assn. resolved the issue whether prior rulemaking was required. Springfield characterized statutory terms to determine the appropriate scope of judicial review of an agency action. The Springfield analysis distinguished agency fact finding, which is reviewed for substantial evidence, ORS 183.482(8)(c), from agency interpretation of law, which is reviewed for errors of law, ORS 183.482(8)(a), and agency policymaking, which is reviewed to ensure that the agency has not transgressed the limits of its discretionary authority, or of another administrative statutory or constitutional provision, ORS 183.482(8)(b); ⁴ Springfield Education Assn. v. School Dist., supra.

The assistant director cites language from Springfield that an agency may interpret a statutory term either by rule or by order in a contested case. The assistant director argues that the option to interpret by rule or adjudication lies with the agency. Claimant argues that the term "systematic and sustained effort to obtain work" is "unavoidably delegative," meaning, we assume, that the term delegates policymaking responsibility, not a more restrictive interpretive responsibility. Claimant's position is that rulemaking is required before application of any policymaking term.

The Court of Appeals here correctly discerned that categorizing a statutory term for purposes of the scope of judicial review does not by itself compel a particular consequence with regard to rulemaking. The character of a statutory term does not necessarily imply anything about whether an agency needs to make rules.

In Megdal v. Board of Dental Examiners, supra, we held that the breadth of potential administrative choice to develop and execute the term "unprofessional conduct," together with the agency's authority to make rules on that topic and the similarity of the agency with other licensing boards for whom rulemaking was mandatory, indicated a legislative intent that the standard must be explained by rules. We examined the character of the statutory term itself, the rulemaking authority delegated to the agency and we compared the agency's task and structure with comparable agencies to reach our conclusion.

In Ross v. Springfield School Dist., supra, we briefly addressed whether rulemaking was required before the Fair Dismissal Appeals Board (FDAB) could interpret a statutory term by order in a contested case. We held that prior rulemaking was not required both because the term at issue involved interpretation rather than wide policymaking discretion and because the FDAB's enabling legislation did not otherwise indicate a legislative intent to require prior rulemaking. The FDAB only exists as a group of 20 persons from whom hearing panels are drawn to decide individual contested cases. ORS 342.930, 342.905(3). It is not structured to promulgate general rules. The statutes give FDAB no substantive rulemaking authority. It may only promulgate procedural rules for the conduct of its hearings. ORS 342.915(2).

Megdal does not mean that all terms delegating policymaking discretion can be applied only after rulemaking. Nor does Ross mean that terms delegating interpretive responsibility may always be applied as the agency chooses, either by rule or by adjudication. Both cases address only the requirement for rulemaking in the individual agencies at issue in the cases.

It is always possible for the legislature explicitly to require an agency to define any type of statutory term by rulemaking. See, e.g., Marbet v. Portland Gen. Elect., 277 Or. 447, 458, 561 P.2d 154 (1977). In the absence of an explicit directive, the breadth and kind of responsibility delegated to the agency by the statutory term (fact-finding, applying an ambiguous law, or developing policy) will be one, but not a dispositive, factor which may indicate an implicit directive from the legislature for rulemaking. In addition, the tasks the agency is responsible for accomplishing, and the structure by which the agency performs its mandated tasks, all of which are specified in an agency's authorizing legislation, must be examined as a whole in order to discern the legislature's intent with regard to rulemaking.

In McPherson v. Employment Division, supra, a case considering the division of interpretive responsibility between the officials of the Employment Division and the judiciary, we examined the relationships among the assistant director, the Employment Division and the EAB. In that case, we identified the assistant director as the official responsible for interpreting the statutes which regulate the division. 285 Or. at 551, 591 P.2d 1381.

Once again, we consider these relationships. First, we examine the character of the statutory term in dispute. Then, we address the authority delegated and the tasks assigned to the agencies. Finally, we discuss the structure by which the...