Last year, with little fanfare and few comments, the Oregon Legislature passed Senate Bill 228, which made crucial and interesting changes to the authority of the Oregon Construction Contractors Board. Provisions of the new law, which became effective Jan. 1, expand the CCB’s rule-making authority, and make it easier to track and deny new licenses to previously disciplined contractors, as well as add grounds to revoke, suspend, or now condition, licenses.

SB 228 begins with an expansive and unique grant of rulemaking authority — one that a search of Oregon law turns up in only one other place: in the adoption of rules that govern the state building code and its enforcement (ORS 455.112, originally enacted in 2003). The new law allows the CCB to adopt rules wherever licensing requirements are “unclear, duplicative or in conflict” or when a licensing requirement “conflicts” with the CCB’s “efforts to modernize operations.” The rules may “interpret, harmonize, streamline, adjust or promote consistent application” of the licensing requirements. Usually, a grant of rulemaking power to an agency simply says the agency may adopt rules necessary to implement its responsibilities as specified by the legislature. Here, the grant is much broader.

The bill also adds something I have not found anywhere else in Oregon law: the ability for the CCB to enact rules that identify “exceptional circumstances” that would allow the board to consider a complaint against a contractor and presumably discipline that contractor for something the CCB would “otherwise deny.” While it is not entirely clear what the legislature meant by a complaint the CCB would otherwise deny, one likely explanation is a grant to the CCB to define for itself activities so “exceptional” and egregious as to warrant penalty, although not specified by the legislature.

Currently, the CCB has proposed no new rules under the new authority granted by SB 228. No doubt, the new law and especially the ability to define “exceptional circumstances” that allow for contractor sanctions when not otherwise specified by the legislature will have a lot of lawyers — and any contractor caught up in it — scratching their heads. It also will be interesting to see how the CCB chooses to implement its new powers, especially now, in an era when the exercise of broad discretion by administrative agencies is under increased scrutiny by the courts — see the recent U.S. Supreme Court argument in Loper Bright Enterprises, Inc. v. Raimondo, seeking to overturn the deference given to administrative agency decisions. In Oregon, specifically, there are limits on how much the legislature can delegate to agencies the ability to enact regulations: the legislature “cannot delegate its power to make law, but … it can delegate, at least to an agency of government, the power to determine the existence of facts or circumstances mentioned in the law upon which the law will become operative.” See State v. Sargent (1969). How the CCB decides to move forward with new regulations will determine whether the regulations can withstand legal challenges.

Next, the bill gave the CCB the ability to “condition” licenses, and revoke, suspend, or refuse to issue or reissue them as a penalty for a laundry list of bad acts, including a few new ones. SB 228 now empowers the CCB to sanction contractors, condition their license, or deny a license application based on failure to comply with a previous settlement agreement entered in a CCB proceeding; failure to pay a subcontractor or vendor resulting in a lien; failure to pay subcontractors or vendors on public projects after payment by the government; and, most significant, being the holder of a current license or the applicant for a new license while also being a business, a reorganized business, or a business with the same “owner, director, officer or partner” of a prior licensee whose license had been revoked, suspended, or otherwise penalized. This includes not only penalties imposed by the CCB, but other statutory penalties and sanctions in other states, as long as they “related to … engaging in construction.” The obvious problem addressed by this last new provision is the continuing practice of contractors whose license has been previously revoked simply moving on to a new business entity, receiving a new license, and continuing to perform as a contractor — in defiance of the CCB’s responsibility to protect the public from unscrupulous practitioners.

Finally, SB 228 includes several grammatical changes to clarify prior provisions. All in all, the new legislation provides for much-needed changes to enable the CCB to address trends in the industry and the ongoing practice of unprincipled contractors jumping from one business to another. It remains to be seen how the CCB will implement its new rulemaking authority and whether it stays within the limits of administrative authority to expand upon what is granted by the legislature.

This column is intended to provide readers with general information and not legal advice. Consult professional counsel for help regarding specific situations.

Column first appeared in the Oregon Daily Journal of Commerce on February 16, 2024.