Wolf v. Oregon Lottery Commission, 344 Or. 345

Summary

The Oregon Supreme Court reversed the Court of Appeals and upheld an Oregon Lottery Commission rule establishing compensation rates for video lottery retailers. The court held that ORS 461.445 requires the Lottery to attempt to maximize state revenue while providing retailers a reasonable rate of return, and that facial review under ORS 183.400 is limited principally to the rule’s text, the authorizing statutes, and rulemaking-procedure documents. The court also rejected the constitutional challenge concerning permissible Lottery administrative costs.

Holdings

1. ORS 461.445 requires the Lottery Commission to attempt to develop a payment system that maximizes net revenue to the state while providing retailers a reasonable rate of return; it does not require the Lottery to guarantee that the system precisely achieves both goals for every retailer.
2. In a facial challenge to an administrative rule under ORS 183.400, judicial review is limited to the wording of the rule, read in context, and the statutory provisions authorizing the rule, except that documents necessary to demonstrate compliance with rulemaking procedures may also be considered when that issue is presented.
3. The former Lottery compensation rule was not facially invalid because it fulfilled the legislative directive by establishing a payment scheme that attempted to maximize state revenue while providing retailers a reasonable rate of return.
4. The constitutional challenge was not well taken in the ORS 183.400 proceeding because the constitutional provision's reference to costs of administration concerns the Lottery's administrative costs, not the operating costs of retailers accounted for by the compensation rule.

Questions Presented

1. Whether ORS 461.445 required the Lottery Commission to establish a compensation system that actually achieved a reasonable rate of return for each retailer, rather than merely requiring the Lottery to attempt to develop such a system.
2. Whether a court reviewing a facial challenge under ORS 183.400 may examine the rulemaking record and the statements or reasoning of individual agency rulemakers.
3. Whether the Lottery's retailer-compensation rule exceeded the agency's statutory authority under ORS 461.445.
4. Whether the rule violated Article XV, section 4(3), of the Oregon Constitution by allowing compensation rates that exceeded permissible Lottery administrative costs.

Disposition

reversed