648 December 20, 2023 No. 666

IN THE COURT OF APPEALS OF THE 

STATE OF OREGON

NORTHWEST NATURAL GAS COMPANY, 

Avista Corporation, 

and Cascade Natural Gas Corporation,

Petitioners,

v.

ENVIRONMENTAL QUALITY COMMISSION,

Respondent,

and,

NATURAL RESOURCES DEFENSE COUNCIL,

Intervenor-Respondent,

and,

BEYOND TOXICS, 

Climate Solutions, 

Environmental Defense Fund, 

Oregon Business Alliance for Climate-dba Oregon 

Business For Climate, 

and Oregon Environmental Council,

Intervenors-Respondents.

A178216 (Control)

OREGON FARM BUREAU FEDERATION; 

Oregon Business & Industry Association; 

Oregon Manufacturers and Commerce; 

Alliance of Western Energy Consumers;

Associated Oregon Loggers, Inc.; 

Northwest Pulp and Paper Association; 

Oregon Association of Nurseries; 

Oregon Forest And Industries Council; 

Oregon Trucking Associations, Inc.; 

Western Wood Preservers Institute;

Otley Land and Cattle, LLC; 

and Space Age Fuel, Inc.,

Petitioners,

NATIONAL FEDERATION OF INDEPENDENT 

BUSINESS,

Intervenor-Petitioner,

v.
Cite as 329 Or App 648 (2023) 649

ENVIRONMENTAL QUALITY COMMISSION,

Respondent.

A178217

WESTERN STATES PETROLEUM ASSOCIATION,

Petitioner,

v.

ENVIRONMENTAL QUALITY COMMISSION,

Respondent.

Environmental Quality Commission

A178218

Argued and submitted September 29, 2023.

Megan H. Berge, California, argued the cause for petitioners Northwest Natural Gas Company, Avista Corporation, 

and Cascade Natural Gas Corporation. Also on the briefs 

were Clifford S. Davidson, Drew L. Eyman, and Snell & 

Wilmer LLP; and Sterling Marchand, Scott Novak, and 

Baker Botts L.L.P., California.

Rachel C. Lee argued the cause for petitioners Oregon 

Farm Bureau Federation, Oregon Business & Industry 

Association, Oregon Manufacturers and Commerce, Alliance 

of Western Energy Consumers, Associated Oregon Loggers, 

Inc., Northwest Pulp and Paper Association, Oregon 

Association of Nurseries, Oregon Forest and Industries 

Council, Oregon Trucking Associations, Inc., Western Wood 

Preservers Institute, Otley Land and Cattle, LLC, and 

Space Age Fuel, Inc. Also on the briefs were Thomas R. 

Wood, Geoffrey B. Tichenor, and Stoel Rives LLP.

Steven G. Liday argued the cause for petitioner Western 

States Petroleum Association. Also on the briefs were Joshua 

M. Sasaki, Ivan Resendiz Gutierrez, Katelyn J. Fulton, and 

Miller Nash LLP.

Carson L. Whitehead, Assistant Attorney General, 

argued the cause for respondent Environmental Quality 

Commission. Also on the brief were Ellen F. Rosenblum, 

Attorney General, and Benjamin Gutman, Solicitor General.

Daniel C. Snyder and Public Justice, Washington, D. C., 

and Pete Huffman and Natural Resources Defense Council, 
650 N.W. Natural Gas Co. v. Environ. Quality Comm.

Washington, D. C., filed the brief for intervenor-respondent 

Natural Resources Defense Council.

Rachel C. Lee argued the cause for intervenor-petitioner 

National Federation of Independent Business. Also on the 

briefs were Thomas R. Wood, Geoffrey B. Tichenor, and 

Stoel Rives LLP.

Maura C. Fahey argued the cause for intervenor-respondents Beyond Toxics, Climate Solutions, Environmental 

Defense Fund, Oregon Business for Climate, and Oregon 

Environmental Council. Also on the brief were Erin HoganFreemole and Crag Law Center.

C. Robert Steringer, Erica Tatoian, and Harrang Long 

Gary Rudnick P.C. filed the brief amicus curiae for Office & 

Professional Employees International Union, Local 11.

Sadie Normoyle and Western Environmental Law 

Center filed the brief amicus curiae for Affiliated Tribes of 

Northwest Indians.

Jonah Sanford and Northwest Environmental Defense 

Center filed the brief amicus curiae for Northwest 

Environmental Defense Center, Pineros Y Campesinos 

Unidos del Noroeste, Oregon Public Health Association, 

Leslie Hammer, Ph.D., Our Climate, NAACP EugeneSpringfield Branch #1119, and Community Energy Project.

Molly Tack-Hooper and Earthjustice (Washington) filed 

the brief amicus curiae for Rogue Climate, Verde, and 

Columbia Riverkeeper.

Jesse A. Buss, Bridgett Chevallier, and Willamette Law 

Group, PC, filed the brief amicus curiae for New Seasons 

Market LLC, SERA Architects, Inc., Indow, Neil Kelly 

Company, and Friends of Family Farmers.

Before Egan, Presiding Judge, and Kamins, Judge, and 

Kistler, Senior Judge.

KAMINS, J.

Rules invalid.
Cite as 329 Or App 648 (2023) 651
652 N.W. Natural Gas Co. v. Environ. Quality Comm.

KAMINS, J.

Petitioners challenge the validity of the administrative rules that establish the Climate Protection Program, 

OAR 340-271-0010 to 340-271-9000 (the CPP rules).1

 Those 

rules impose “cap and reduce” regulations on the distribution of fossil fuels in the State of Oregon and require certain 

large stationary sources to limit their emissions from industrial processes.

Pursuant to ORS 183.400,2 petitioners raise 

numerous assignments of error, contending that the CPP 

rules are invalid. In this opinion, we address only one of 

those assignments, because it is dispositive regarding the 

validity of the CPP rules. Specifically, we agree that the 

Environmental Quality Commission (EQC), in adopting 

the CPP rules, did not comply with the heightened disclosure requirements applicable to it when it adopts rules 

that apply to entities required to obtain Title V permits 

under the federal Clean Air Act (Title V sources). ORS 

468A.327(1).3

Because EQC, when adopting the CPP rules, did 

not comply—or even substantially comply—with the heightened disclosure requirements applicable to it when adopting 

rules that apply to Title V sources, we conclude that the CPP 

rules are invalid.

1 Additionally, the CPP rules include amendments to other administrative 

rules, such as, as noted by one group of petitioners, OAR 340-012-0054.

2 ORS 183.400 provides, in part:

“The validity of any rule may be determined upon a petition by any person to the Court of Appeals[.]”

3 ORS 468A.327(1) provides:

“Prior to the adoption, amendment or repeal of any rule pursuant to 

ORS chapter 183 that applies to any facility required to pay fees under 

ORS 468A.315, the Environmental Quality Commission shall include with 

the notice of intended action required under ORS 183.335(1) a statement of 

whether the intended action imposes requirements in addition to the applicable federal requirements and, if so, shall include a written explanation of:

“(a) The commission’s scientific, economic, technological, administrative 

or other reasons for exceeding applicable federal requirements; and

“(b) Any alternatives the commission considered and the reasons that 

the alternatives were not pursued.”
Cite as 329 Or App 648 (2023) 653

I. BACKGROUND

The Legislative Assembly has recognized that 

global warming “poses a serious threat to the economic wellbeing, public health, natural resources and environment of 

Oregon.”4

 ORS 468A.200(3). Greenhouse gases (GHG) are 

gasses which “contribute[] to anthropogenic global warming.” ORS 468A.210(2).

In 2020, recognizing the danger posed to Oregonians 

by GHG, then Governor Brown issued Executive Order 

20-04, in which she directed EQC and the Department of 

Environmental Quality (DEQ) to develop rules establishing 

a sector specific GHG “cap and reduce program.” Specifically, 

Governor Brown directed EQC and DEQ to “take actions 

necessary” to “cap and reduce” GHG emissions from large 

stationary sources, from transportation fuels, and from all 

other liquid and gaseous fuels.

In accordance with that directive, EQC and DEQ 

engaged in an extensive and public process to develop the 

CPP rules. As adopted, the rules aim to, among other things, 

“reduce greenhouse gas emissions from sources in Oregon.” 

OAR 340-271-0010(3).

The CPP rules aim to reduce greenhouse gas emissions in two ways. First, they create a cap-and-reduce system under which DEQ distributes compliance instruments 

to covered fuel suppliers, with each compliance instrument 

authorizing the equivalent of one metric ton of carbon dioxide emissions. Second, they impose a technology and operations-based standard on certain large stationary sources 

that requires those sources to determine the best available 

emissions reductions and then take steps to achieve those 

reductions.

On review, in additional to various substantive 

challenges to the rules, one group of petitioners argues 

that the rules are invalid because they were not adopted 

in compliance with disclosure requirements for rulemaking in ORS 468A.327(1), which, as noted above, imposes 

4 “‘Global warming’” means “‘an increase in the average temperature of the 

earth’s atmosphere that is associated with the release of greenhouse gases.’” ORS 

468A.210(1). 
654 N.W. Natural Gas Co. v. Environ. Quality Comm.

heightened disclosure requirements for rulemaking when 

those rules apply to Title V sources. In response, EQC does 

not dispute that it did not comply with the requirements of 

ORS 468A.327(1). It contends, however, that we should not 

invalidate the CPP rules, because EQC “substantially complied” with those requirements.

As explained further below, we conclude that in 

a rule challenge pursuant to ORS 183.400(4)(c), the standard under which we review EQC’s compliance with ORS 

468A.327(1) is, simply, whether EQC complied with ORS 

468A.327(1), not whether EQC “substantially complied,” as 

EQC contends. Further, we conclude that, even if EQC is 

correct that it needed to only “substantially comply” with 

ORS 468A.327(1), it failed to do so. As a result, we conclude 

that the CPP rules are invalid.

II. ANALYSIS

We first explain why, in this rule challenge under 

ORS 183.400(4)(c), we review for EQC’s compliance with the 

rulemaking procedures set forth in ORS 468A.327(1), not 

substantial compliance. We then explain that EQC failed to 

comply with ORS 468A.327(1) and that, even if substantial 

compliance was the standard, EQC failed to substantially 

comply with ORS 468A.327(1). Finally, we explain why our 

conclusions regarding compliance render the CPP rules 

invalid.

A. EQC Was Required to Comply with ORS 468A.327.

As noted, petitioners bring this rule challenge pursuant to ORS 183.400. “Under ORS 183.400(1), ‘any person’ 

may petition this court to determine the validity of a rule.” 

Ciecko v. DLCD, 290 Or App 655, 661, 415 P3d 1122 (2018) 

(some internal quotation marks omitted).

Our review of an administrative rule under ORS 

183.400 “is limited to an examination of the rule under 

review, the statutory provisions authorizing the rule, and 

the documents necessary to demonstrate compliance with 

the applicable rulemaking procedures.” Id. (citing ORS 

183.400(3)). “After the limited examination, a court invalidates an administrative rule only if it finds that the rule 
Cite as 329 Or App 648 (2023) 655

violates constitutional provisions, exceeds the statutory 

authority of the agency that adopted the rule, or was adopted 

without compliance with the applicable rulemaking procedures.” Id. (citing ORS 183.400(4)).5

As a threshold issue, the parties dispute what standard this court applies when deciding whether to invalidate rules based on petitioners’ procedural objections under 

ORS 183.400(4)(c). EQC, citing ORS 183.335(11)(a), contends 

that this court reviews the adequacy of EQC’s notice of proposed rulemaking for “substantial compliance” with ORS 

468A.327(1). As described more fully below, ORS 183.335 

requires administrative agencies to publish a notice of proposed rulemaking prior to rulemaking, sets forth certain 

requirements for the contents of that notice, and provides that 

“a rule is not valid unless adopted in substantial compliance 

with the provisions of this section.” As EQC points out, and as 

also described more fully below, the “‘doctrine of substantial 

compliance has previously been used *** to avoid the harsh 

results of insisting on literal compliance with statutory notice 

provisions where the purpose of these requirements has been 

met.’” Friends of the Columbia Gorge v. Energy Fac. Siting 

Coun., 365 Or 371, 389, 446 P3d 53 (2019) (quoting Brown v. 

Portland School Dist. #1, 291 Or 77, 81, 628 P2d 1183 (1981) 

(omission in Friends of the Columbia Gorge)).

Petitioners disagree. They contend that actual compliance with ORS 468A.327(1) is required, and that substantial compliance is not sufficient.

“Whether the doctrine of substantial compliance 

applies is a question of statutory interpretation.” Tompte v. 

Stone, 195 Or App 599, 602, 98 P3d 1171 (2004); Parthenon 

Construction & Design, Inc. v. Neuman, 166 Or App 172, 180, 

999 P2d 1169 (2000) (considering the text of a statute in 

determining whether the doctrine of substantial compliance 

was applicable). In interpreting a statute, we “ascertain the 

5 ORS 183.400(4) provides:

“The court shall declare the rule invalid only if it finds that the rule:

“(a) Violates constitutional provisions;

“(b) Exceeds the statutory authority of the agency; or

“(c) Was adopted without compliance with applicable rulemaking 

procedures.”
656 N.W. Natural Gas Co. v. Environ. Quality Comm.

legislature’s intentions by examining the text of the statute in its context, along with relevant legislative history, 

and, if necessary, canons of construction.” State v. Little, 326 

Or App 788, 791, 533 P3d 11070 (2023) (internal quotation 

marks omitted). In ascertaining the legislature’s intentions, 

our lodestar is the statutory text, as “there is no more persuasive evidence of the intent of the legislature than the 

words by which the legislature under-took to give expression to its wishes.” SAIF v. Ward, 369 Or 384, 394, 506 P3d 

386 (2022) (internal quotation marks omitted).

In this case, to help frame our analysis regarding 

whether the standard is “compliance” or “substantial compliance,” we begin by describing the Supreme Court’s decision in Friends of the Columbia Gorge, before turning to the 

text, context, and legislative history of ORS 468A.327(1).

1. Friends of the Columbia Gorge

In Friends of the Columbia Gorge, the Supreme 

Court considered whether to apply a “compliance” or a “substantial compliance” standard when evaluating the validity 

of a rule in a challenge brought under ORS 183.400(4)(c).

In that case, the petitioners challenged rules adopted 

by the Energy Facility Siting Council (EFSC), contending 

that, in adopting the rules at issue, EFSC had failed to comply with the procedural requirements of ORS 183.335. 365 

Or at 376. The petitioners argued that a “strict-compliance” 

standard applied, because ORS 183.400(4)(c) requires “compliance with applicable rulemaking procedures.” Id. at 377. 

EFSC argued that a “substantial compliance” standard 

applied, because “chapter 183 requires only ‘substantial 

compliance’ with the notice procedures contained in ORS 

183.335” and each of the “petitioners’ procedural objection 

arises under ORS 183.335.” Id. at 376-77.

Framing the issue as one involving its “standard 

of review” and “what standard [the Supreme Court] applies 

when deciding whether to invalidate rules based on a petitioner’s procedural objections,” the court agreed with EFSC 

that “substantial compliance” was the standard, reasoning:

“Petitioners’ reliance on ORS 183.400(4)(c) begs the question of what an agency must do to comply with applicable 
Cite as 329 Or App 648 (2023) 657

rulemaking procedures. At least with regard to the procedures in ORS 183.335, an agency satisfies those statutory 

requirements by substantially complying with the procedures set out in the statute. In that sense, a rule adopted in 

substantial compliance with ORS 183.335 is a rule adopted 

in ‘compliance with applicable rulemaking procedures.’”

Id. at 377.

In our view, the Supreme Court’s analysis in Friends 

of the Columbia Gorge demonstrates that, in reviewing a 

rule challenge brought under ORS 183.400(4)(c), whether 

we review for “compliance” or “substantial compliance” is a 

function of the statutory section setting forth the specific 

procedures for promulgating the rule. While some rulemaking statutes, such as ORS 183.335—the statute at issue in 

Friends of the Columbia Gorge—require only substantial 

compliance, others, such as ORS 196.471, appear to require 

actual compliance. See Ciecko, 290 Or App at 668 (in challenge under ORS 183.400(4)(c) asserting agency did not comply with rulemaking requirements set forth in ORS 196.471, 

invalidating rules because, among other reasons, agency 

failed to “comply with applicable rulemaking procedures 

set out in ORS 196.471”).6

 Thus framed, the question in this 

6 We pause to note that, historically, we have not always been consistent in 

describing our standard of review in rule challenges brought pursuant to ORS 

183.400(4)(c).

In Ciecko, for example, we applied a compliance standard, invalidating rules 

when those rules did not “comply with the applicable rulemaking procedures.” 

290 Or App at 668. In explaining our standard of review under ORS 183.400, 

we noted that “a court invalidates an administrative rule only if it finds that 

the rule violates constitutional provisions, exceeds the statutory authority of the 

agency that adopted the rule, or was adopted without compliance with the applicable rulemaking procedures.” Id. (citing ORS 183.400(4)). But we did not further 

explain why we were applying a “compliance” standard rather than a “substantial compliance” standard in that case. See generally id.

In contrast, in County of Morrow v. Dept. of Fish & Wildlife, 178 Or App 329, 

333, 37 P3d 180 (2001), we pointed to a “substantial compliance” standard being 

applicable, stating, “[w]e may invalidate an administrative rule if it was adopted 

without substantial compliance with applicable rulemaking procedures. ORS 

183.335(10)(a); ORS 183.400(4)(c).” But beyond bare citation to ORS 183.335(10)

(a) and ORS 183.400(4)(c), we did not explain why a “substantial compliance” 

standard was appliable given the particular challenges to the administrative 

rule in that case. Further, in County of Morrow, our analysis demonstrated the 

administrative agency in fact complied with the applicable rulemaking procedures and therefore the result would have been the same regardless of whether 

our review was for “compliance” or “substantial compliance.” That is, we do not 

understand our standard of review to have been a live issue in the case.
658 N.W. Natural Gas Co. v. Environ. Quality Comm.

case is whether the legislature intended to incorporate the 

doctrine of substantial compliance into ORS 468A.327(1) or 

whether it intended to require actual compliance.

With that in mind, we turn to ORS 468A.327(1) 

to determine whether it requires substantial or actual 

compliance.

2. ORS 468A.327(1)

The particular rulemaking requirements that petitioners contend EQC did not comply with are found in ORS 

468A.327(1), which provides:

“Prior to the adoption, amendment or repeal of any 

rule pursuant to ORS chapter 183[, i.e., the Administrative 

Procedures Act,] that applies to any facility required to pay 

fees under ORS 468A.315[, i.e., any facility with a Title V 

operating permit], the Environmental Quality Commission 

shall include with the notice of intended action required 

under ORS 183.335(1) a statement of whether the intended 

action imposes requirements in addition to the applicable 

federal requirements and, if so, shall include a written 

explanation of:

“(a) The commission’s scientific, economic, technological, administrative or other reasons for exceeding applicable federal requirements; and

“(b) Any alternatives the commission considered and 

the reasons that the alternatives were not pursued.”7

(Emphases added.)

In any event, as described above, in view of the Supreme Court’s analysis in 

Friends of the Columbia Gorge, we understand our standard of review under ORS 

183.400(4)(c) to turn on the particular statute or rule imposing the rulemaking 

procedures at issue.

7 The parties do not dispute that the phrase “facility required to pay fees 

under ORS 468A.315” in ORS 468A.327(1) means any facility with a Title V operating permit.

In short, ORS 468A.315(1) sets fees for sources “subject to the federal operating 

permit program,” a phrase which ORS 468A.300(3) defines as “the program established by [EQC] and the [DEQ] pursuant to ORS 468A.310.” And ORS 468A.310 

requires EQC and DEQ to establish “a federal operating permit program as 

required to implement Title V [of the federal Clean Air Act, see ORS 468A.300(5)]. 

See also Testimony, Joint Subcommittee on Natural Resources, Senate Bill (SB) 

107, Apr 19, 2007 (Andrew Ginsburg, DEQ air quality administrator) (explaining 

that the legislation now codified at ORS 468A.327(1) “would require us to do more 

public disclosure when we adopt rules that affect Title V sources”).
Cite as 329 Or App 648 (2023) 659

As an initial matter, in considering what the legislature intended with regard to ORS 468A.327(1), we note 

that it twice uses the word “shall”—i.e., the EQC “shall ** * 

include a statement” of whether the intended action imposes 

requirements in addition to the applicable federal requirements and, if so, “shall include a written explanation” of the 

“commission’s scientific, economic, technological, administrative or other reasons for exceeding applicable federal 

requirements” and any “alternatives the commission considered and the reasons that the alternatives were not pursued.” The term “‘shall’ is a command expressing what is 

mandatory.” Bacote v. Johnson, 333 Or 28, 33, 35 P3d 1019 

(2001). That is, when the legislature uses the term “shall,” it 

intends to create a mandatory obligation. Little, 326 Or App 

at 793 (citing cases using the term “shall” for the proposition 

that “[t]he legislature knows how to indicate a mandatory 

obligation”). That indicates that the legislature intended the 

requirements imposed by ORS 468A.327(1) on EQC when 

adopting rules that apply to Title V sources to be mandatory.

It is also noteworthy that, elsewhere, the legislature 

has expressly imposed a “substantial compliance” standard 

when that is what it intended. See, e.g., ORS 250.085 (“The 

Supreme Court shall review the title for substantial compliance with the requirements of ORS 250.035.”); ORS 222.310 

(“ORS 222.210 to 222.310 shall be construed liberally, and 

substantial compliance with the provisions of those sections 

shall be sufficient.”); ORS 25.287(d) (“The only issues at 

proceedings under this subsection are whether three years 

have elapsed, or such shorter cycle as determined by rule 

of the department, and whether the support obligation is in 

substantial compliance with the formula established under 

ORS 25.275.”). And it is particularly noteworthy that, elsewhere, when the legislature has used “shall” in conjunction 

with a rulemaking requirement but intended to impose only 

a “substantial compliance” standard, it has said so expressly. 

ORS 183.335 (setting forth requirements for rulemaking 

using the word “shall” but noting “a rule is not valid unless 

adopted in substantial compliance with the provisions of this 

section”); ORS 183.341 (providing that agencies “shall adopt 

rules of procedure which will provide a reasonable opportunity for interested persons to be notified of the agency’s 
660 N.W. Natural Gas Co. v. Environ. Quality Comm.

intention to adopt, amend or repeal a rule” and noting rules 

are invalid if not adopted in “substantial compliance” with 

the rules regarding notice adopted by the agency).

That indicates that the “legislature knows how to 

provide for substantial compliance [with] a statutory requirement when it decides that such a doctrine is appropriate.” 

Tompte, 195 Or App at 603; see also Villanueva v. Board of 

Psychologist Examiners, 175 Or App 345, 357, 27 P3d 1100 

(2001), adh’d to on recons, 179 Or App 134, 39 P3d 238 (2002) 

(“When the legislature [has] intended to permit substantial 

compliance with *** statutory notice requirements, [it has] 

said so expressly.”). And further, it knows how to do so in the 

context of rulemaking. ORS 183.335(11)(a); ORS 183.341(5). 

But it did not do so in ORS 468A.327. Thus, it appears that 

the legislature intended to require EQC to comply—not 

merely “substantially comply”—with the requirements of 

ORS 468A.327 when adopting rules that apply to Title V 

sources. See ORS 174.010 (“In the construction of a statute, 

the office of the judge is simply to ascertain and declare 

what is, in terms or in substance, contained therein, not to 

insert what has been omitted[.]”).

One piece of statutory context potentially pointing in 

the other direction is ORS 183.335, the statute EQC cites in 

contending that we should apply a “substantial compliance” 

standard in reviewing this rule challenge. Indeed, ORS 

183.335(1) is expressly cross-referenced in ORS 468A.327(1).

As relevant here, ORS 183.335(1)8

 requires agencies, “prior to the adoption, amendment or repeal of any 

rule,” to give “notice of its intended action” in various ways; 

8 ORS 183.335(1) provides:

“Prior to the adoption, amendment or repeal of any rule, the agency shall give 

notice of its intended action:

“(a) In the manner established by rule adopted by the agency under ORS 

183.341(4), which provides a reasonable opportunity for interested persons to 

be notified of the agency’s proposed action;

“(b) In the bulletin referred to in ORS 183.360 at least 21 days prior to 

the effective date;

“(c) At least 28 days before the effective date, to persons who have 

requested notice pursuant to subsection (8) of this section; and

“(d) Delivered only by electronic mail, at least 49 days before the effective 

date, to the persons specified in subsection (15) of this section.”
Cite as 329 Or App 648 (2023) 661

ORS 183.335(2)9

 contains requirements regarding the contents of the notice of intended action; and ORS 183.335(11)(a) 

provides:

“Except [in circumstances not present here], a rule is 

not valid unless adopted in substantial compliance with 

the provisions of this section in effect on the date that the 

notice required under subsection (1) of this section is delivered to the Secretary of State for the purpose of publication 

in the bulletin referred to in ORS 183.360.”

We do not, however, understand the substantial 

compliance provision set forth in ORS 183.335(11)(a) to 

apply to the information that EQC is required to disclose 

under ORS 468A.327(1), as EQC contends. That is because, 

by its terms, the substantial compliance provision of ORS 

9 ORS 183.335(2) provides, in part:

“(b) The agency shall include with the notice of intended action given 

under subsection (1) of this section:

“(A) A citation of the statutory or other legal authority relied upon and 

bearing upon the promulgation of the rule;

“(B) A citation of the statute or other law the rule is intended to 

implement;

“(C) A statement of the need for the rule and a statement of how the rule 

is intended to meet the need;

“(D) A list of the principal documents, reports or studies, if any, prepared 

by or relied upon by the agency in considering the need for and in preparing 

the rule, and a statement of the location at which those documents are available for public inspection. The list may be abbreviated if necessary, and if so 

abbreviated there shall be identified the location of a complete list;

“(E) A statement of fiscal impact identifying state agencies, units of 

local government and the public that 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. For an agency specified in ORS 183.530, the 

statement of fiscal impact shall also include a housing cost impact statement 

as described in ORS 183.534;

“(F) A statement identifying how adoption of the rule will affect racial 

equity in this state;

“(G) If an advisory committee is not appointed under the provisions of 

ORS 183.333, an explanation as to why no advisory committee was used to 

assist the agency in drafting the rule; and

“(H) A request for public comment on whether other options should be 

considered for achieving the rule’s substantive goals while reducing the negative economic impact of the rule on business.”
662 N.W. Natural Gas Co. v. Environ. Quality Comm.

183.335(11)(a) refers to only the requirements imposed 

in ORS 183.335 itself—that is the plain meaning of “substantial compliance with the provisions of this section.” 

(Emphasis added.) Put another way, the requirements 

imposed by ORS 468A.327(1) on EQC when adopting rules 

that apply to Title V sources are not requirements imposed 

by ORS 183.335. And we do not think it is a natural reading 

of ORS 468A.327(1) and ORS 183.335 that the requirements 

imposed by ORS 468A.327(1) become requirements imposed 

by ORS 183.335 merely because they must be disclosed in 

the notice that is required by ORS 183.335(1). Had the legislature intended substantial compliance with the disclosure 

requirements set forth in ORS 468A.327(1) to be sufficient, 

it would have said so, just as it did when setting forth certain requirements for rulemaking in other sections of the 

Oregon Revised Statutes, such as ORS 183.335 and ORS 

183.341, as described above.10

Our understanding that the legislature intended 

compliance (not merely substantial compliance) with ORS 

468A.327(1) finds support in that statute’s legislative history. That history reflects that the legislative intent in 

enacting ORS 468A.327(1) was to require heightened disclosure requirements for EQC when adopting rules that apply 

to Title V sources in part to provide assurance to industry 

that EQC had “looked at all the issues.” Testimony, Joint 

Subcommittee on Natural Resources, Senate Bill (SB) 107, 

Apr 19, 2007 (John Ledger, Associated Oregon Industries).

ORS 468A.327 was enacted as 2007, as SB 107. 

Or Laws 2007, ch 480, § 3. As initially introduced, the bill 

increased fees on Title V sources in order to assist with staffing shortages at DEQ in operating Oregon’s Title V program. 

SB 107, Introduced; Testimony, Joint Subcommittee on 

Natural Resources, SB 107, Apr 19, 2007 (Andrew Ginsburg, 

DEQ air quality administrator). Under federal law, that 

program is required to be completely funded from fees from 

Title V sources, and the fees had not kept up with costs of 

10 We note that ORS 183.335 was enacted in 1971, while ORS 468A.327 was 

enacted over three decades later in 2007. Or Laws 2007, ch 480, § 3. We do not 

understand the intent of the 1971 Legislative Assembly in enacting ORS 183.335 

to have any bearing on our effort to discern the intent of the 2007 Legislative 

Assembly in enacting ORS 468A.327.
Cite as 329 Or App 648 (2023) 663

running the program. Id. After it was introduced, SB 107 

was amended to include the disclosure requirements now 

found in ORS 468A.327(1), to provide the right to a hearing 

before EQC in certain circumstances when new rules apply 

to Title V sources,11 and to phase in the fee increases that 

were proposed in the initial version of SB 107.

Testifying in support of the amendments to SB 107, 

DEQ air quality administrator Andrew Ginsburg explained 

that the amendments to SB 107 and, specifically, the disclosure provisions now in ORS 468A.327(1), would “require 

us to do more public disclosure when we adopt rules that 

affect Title V sources.” Testimony, Joint Subcommittee 

on Natural Resources, SB 107, Apr 19, 2007 (Andrew 

Ginsburg). Ginsburg explained that prior to SB 107, if EQC 

adopted “a rule that’s more stringent than a federal rule, [it] 

already disclosed the difference and the reason that we’re 

being different from the federal law,” but that SB 107 added 

the requirement that EQC also “describe what alternatives 

we considered and why we rejected the alternatives.” Id. 

Additionally, John Ledger, on behalf of Associated Oregon 

Industries (AOI), explained that AOI supported SB 107, as 

amended to contain the disclosure requirements now in 

ORS 468A.327(1), in part, because it “gives assurances to 

industry that when the EQC does go beyond federal [law] 

they’ve looked at all the issues” and “gets more information 

11 The hearing provisions in ORS 468A.327 provide, in pertinent part: 

“(3) Notwithstanding ORS 183.335 (3), an opportunity for an oral hearing before the commission regarding the statement specified in subsections 

(1) and (2) of this section shall be granted only if:

“(a) The request for a hearing is received, within 14 days after the commission issues the notice of intended action required under ORS 183.335 (1), 

from 10 persons or from an association having no fewer than 10 members; 

and

“(b) The request describes how the persons or association that made the 

request will be directly harmed by the adoption, amendment or repeal of a 

rule under subsection (1) of this section.

“(4) If an oral hearing is granted under subsection (3) of this section, 

the commission shall give notice of the hearing at least 14 days before the 

hearing to the persons or association requesting the hearing, to any persons 

who have requested notice pursuant to ORS 183.335 (8) and to the persons 

specified in ORS 183.335 (15).

“(5) Subsection (3) of this section does not apply if the commission 

includes with the notice of intended action required under ORS 183.335 (1) a 

notice that an oral hearing will be held before the commission.”
664 N.W. Natural Gas Co. v. Environ. Quality Comm.

out there to the public and everybody else.” Testimony, Joint 

Subcommittee on Natural Resources, SB 107, Apr 19, 2007 

(John Ledger, AOI). Ledger explained that AOI did not support SB 107 as initially introduced, but did support the bill 

with the amendments that required EQC to make the disclosures now required by ORS 468A.327(1). Id.

In consideration of that legislative history, as well 

as the statutory text and context, we conclude that ORS 

468A.327(1) was intended to ensure more—not less—disclosure to Title V sources and not incorporate the doctrine 

of substantial compliance. That is, we understand ORS 

468A.327 to require what it says—that when EQC makes 

rules that apply to Title V sources, it shall disclose the information specified in ORS 468A.327(1).

In sum, in rule challenges brought under ORS 

183.400(4)(c) contending that EQC did not comply with ORS 

468A.327(1), we review for whether EQC actually complied 

with the requirements of ORS 468A.327, not for whether 

EQC “substantially complied.”

B. EQC Did Not Comply, Nor Did it Substantially Comply, 

with ORS 468A.327(1).

Petitioners challenging EQC’s compliance with the 

disclosure requirements of ORS 468A.327(1) raise two contentions: first, that the notice of proposed rulemaking in 

the Secretary of State’s bulletin improperly omitted “(1) any 

statement regarding whether the CPP Rules exceed federal 

requirements on Title V facilities, (2) any description of the 

alternatives considered, and (3) any explanation why those 

alternatives were rejected”; and second, that other forms 

of notice EQC gave “failed to include the statutorily mandated information about alternatives and why they were not 

pursued.”

In response, EQC “acknowledges that the notice 

submitted to the Secretary of State did not include an 

explicit statement about additional federal requirements 

for large stationary sources,”12 but contends that on the 

facts of this case “EQC substantially complied with ORS 

12 Although EQC points out that the Secretary of State’s bulletin did “contain 

notice that the regulations apply to large stationary sources.”
Cite as 329 Or App 648 (2023) 665

468A.327.” Specifically, EQC asserts that its notice of proposed rulemaking, which it posted on its website and sent 

to a distribution list of over 20,000 recipients, contained the 

statement required by ORS 468A.327(1). And, according to 

EQC, that notice, coupled with “18 months of public process regarding the rules,” demonstrates that the public and 

interested parties had “ample notice that the rules would 

impose additional requirements on large stationary sources, 

explained why the rules were needed, and explained the 

alternatives considered.” Therefore, in EQC’s view, it substantially complied with ORS 468A.327.

As we have concluded, substantial compliance with 

ORS 468A.327(1) is not sufficient. The statute requires actual 

compliance. EQC did not comply with ORS 468A.327(1) when 

it adopted the CPP rules, nor does it even contend that it did. 

We thus conclude, as explained below, that the CPP rules 

are invalid. But further, to the extent that ORS 468A.327(1) 

does incorporate the doctrine of substantial compliance, we 

would reach the same conclusion regarding the validity of 

the CPP rules.

Substantial compliance can “be defined only in general language,” but at bottom it “‘requires compliance in 

respect to the essential matters necessary to assure every 

reasonable objective of the statute.’” Rogers v. Roberts, 

300 Or 687, 691, 717 P2d 620 (1986) (quoting Sabatini v. 

Jayhawk Construction Co., Inc., 214 Kan 408, 411, 520 P2d 

1230 (1974)). “‘What constitutes substantial compliance 

with a statute is a matter depending on the facts of each 

particular case.’” Id. at 692 (quoting In re Santore, 28 Wash 

App 319, 327, 623 P2d 702, 1234 (1981)).

Here, the chief difficulty with EQC’s argument is 

with the notice of proposed rulemaking itself. That is, we 

disagree that that notice contained the statement required 

by ORS 468A.327(1) as EQC contends. EQC’s notice stated, 

in pertinent part, as follows:

“Federal relationship

“Relationship to federal requirements

“ORS 183.332, 468A.327 and OAR 340-011-0029 require 

DEQ to attempt to adopt rules that correspond with 
666 N.W. Natural Gas Co. v. Environ. Quality Comm.

existing equivalent federal laws and rules unless there are 

reasons not to do so.

“The proposed rules are ‘in addition to federal requirements’ since there are no federal regulations that require 

the reduction of greenhouse gas emissions from most of the 

affected parties.”

“ ** * **

“What alternatives did DEQ consider if any?

“In designing the Climate Protection Program, DEQ considered many alternatives contained in the proposed rule. 

Extensive outreach with stakeholders beginning in March 

2020, input from the advisory committee in 2021, and public comment throughout the process informed the design of 

the program. Documentation is in the rulemaking record.”

(Boldface in original; font size modified.) But, as noted 

above, ORS 468A.327(1)(b) requires that ECQ’s notice of 

proposed rulemaking include “a written explanation” of “[a]

ny alternatives the commission considered and the reasons 

that the alternatives were not pursued.” We understand 

that requirement to be essential to serving one purpose of 

ORS 468A.327(1), viz., to “give[] assurances to industry that 

when the EQC does go beyond federal [law] they’ve looked at 

all the issues.” Testimony, Joint Subcommittee on Natural 

Resources, SB 107, Apr 19, 2007 (John Ledger, AOI).

Here, the rulemaking record reflects that EQC 

and DEQ did, in fact, consider alternatives to the CPP 

rules that were adopted, and we do not understand EQC to 

argue otherwise. Indeed, the notice of proposed rulemaking 

itself reflects that “DEQ considered numerous options that 

were informed by other jurisdictions’ greenhouse gas programs.” Regarding those alternatives, however, the notice 

of proposed rulemaking merely states that “DEQ considered many alternatives contained in the proposed rule” and 

asserts “[d]ocumentation is in the rulemaking record.” It 

does not explain or attempt to explain “the reasons that the 

alternatives were not pursued” or describe those alternatives, as required by ORS 468A.327(1)(b). Nor does it point 

to where in the rulemaking record such information might 

be found, or even assert that that information can be found 

in the rulemaking record. Nor does the 18 months of public 
Cite as 329 Or App 648 (2023) 667

process, during which DEQ and EQC sought input from the 

public and stakeholders, substantially satisfy the requirement that EQC in its notice of rulemaking reduce to writing 

why it was not pursuing the alternatives it had considered 

when regulating Title V sources. It is not “insisting on literal compliance with statutory notice provisions,” Friends of 

the Columbia Gorge, 365 Or at 389, to require EQC’s notice 

to reflect an attempt to comply with ORS 468A.327(1)(b), 

which, as noted, we understand to be essential to serving 

one purpose of ORS 468A.327(1).

Although EQC engaged in a robust process that 

provided the public a great deal of transparency and numerous opportunities for engagement, it nevertheless did not 

substantially comply with its obligation to provide the specific types of disclosures required by ORS 468A.327(1)(b). 

Thus, even if we were reviewing for substantial compliance 

instead of compliance, we would reach the same conclusion 

regarding the validity of the CPP rules.

C. The CPP Rules Are Invalid.

The remaining question is the appropriate remedy; 

that is, which rules are we are required to hold invalid in 

this rule challenge pursuant to ORS 183.400(4)(c). In a footnote, EQC contends that if we agree with petitioners’ argument that it failed to provide the disclosure required under 

ORS 468A.327(1), the correct remedy would be to invalidate 

only those rules that regulate large stationary sources. In 

response, petitioners who challenge EQC’s compliance with 

ORS 468A.327(1), contend that at least one Title V source 

is a “fuel supplier” under the rules creating the cap-andreduce system. In their view, because the rules creating the 

cap-and-reduce system apply to a Title V source and were 

adopted without compliance with ORS 468A.327, those 

rules, too, are invalid.

We agree with petitioners. As noted, the heightened 

disclosure requirements in ORS 468A.327(1) are applicable when EQC adopts any rule “that applies to any facility 

required to pay fees under ORS 468A.315,” i.e., any facility 

with a Title V operating permit. Because the rules creating 

the cap-and-reduce system do apply to at least one Title V 
668 N.W. Natural Gas Co. v. Environ. Quality Comm.

source and were adopted without compliance with ORS 

468A.315(1), those rules are invalid.13

III. CONCLUSION

In sum, for the reasons above, we conclude that the 

CPP rules are invalid.

Rules invalid.

13 We also note that, part and parcel with those CPP rules discussed above 

that apply directly to Title V sources, are CPP rules pertaining to community 

climate investment entities, OAR 340-271-0900 through 340-271-0990. It is not 

clear to us how those rules could function on their own without the rules that 

create the cap-and-reduce system, nor does EQC advance an argument that we 

should hold those rule valid if we determine that the rules that apply to large stationary sources and the rules that create the cap-and-reduce system are invalid, 

as we do in this opinion. See, e.g., OAR 340-271-0900(2) (setting forth permissible 

uses for community climate investment funds); OAR 340-271-0020(9) (defining 

community climate investment funds as “money paid by a covered fuel supplier to 

a community climate investment entity to support implementation of community 

climate investment projects”).