HADLOCK, J.
Petitioner Hendrickson Trucking, Inc., challenges a final order of the Oregon Department of Transportation (ODOT), which denied petitioner's request for reassessment of certain highway use taxes that ODOT had assessed against it. In that order, ODOT determined that petitioner had not timely requested reassessment and, further, that petitioner had "not made a showing of good cause for the failure to file the request in a timely fashion." On review, petitioner asserts that ODOT was required to hold a hearing on the issue of whether petitioner had good cause for the delay in requesting reassessment because a factual dispute existed on that point. Petitioner also argues that ODOT's order is not supported by substantial
This case involves Oregon's "weight-mile" or "highway use" tax, which is collected from motor carriers "for the maintenance, operation, construction and reconstruction of public highways," and for certain administrative costs. ORS 825.474(1).
American Trucking Assns., Inc. v. State of Oregon, 193 Or.App. 185, 188-89, 90 P.3d 15 (2004), affd in part, rev'd in part on other grounds. 339 Or. 554, 124 P.3d 1210 (2005) (footnote omitted).
Carriers generally report and pay the tax on a monthly basis. ORS 825.490(2). When practicable, ODOT audits those reports. ORS 825.490(3).
Id. ODOT gives "written notice of such additional assessment" to "the person concerned." ORS 825.490(7). The person may petition ODOT for reassessment and request a hearing "within 30 days after service upon the person of notice." ORS 825.496(1).
In this case, ODOT notified petitioner in late 2011 that it would be auditing petitioner's "weight-mile" records for certain periods in 2009, 2010, and 2011, and it requested copies of the pertinent records. Petitioner provided those records to ODOT over the next few months. In February 2012, ODOT proposed a highway use tax assessment of roughly $350,000 based upon its review of petitioner's records, making adjustments for what ODOT determined to be "unreported mileage, weight adjustments and math discrepancies on reports." ODOT asked petitioner to submit any additional information that it wanted the auditor to consider, ultimately setting a deadline of April 10, 2012, for its receipt of that information. The record includes no indication that petitioner submitted any additional information by the April 10 deadline.
On April 26, 2012, ODOT sent a document titled "NOTICE OF HIGHWAY USE TAX ASSESSMENT—OFFICIAL BILLING" (the Notice and Billing) to petitioner by regular mail. That document reflected a total unpaid balance of over $353,000, including taxes, penalties, interest, and other expenses. The Notice and Billing spelled out the method by which petitioner could petition for reassessment:
(Boldface and capitalization in original.) The Notice and Billing further stated that the audit would become final on May 29, 2012. The back of the document provided more detail, explaining what information a petition for reassessment should include, where it
It is undisputed that petitioner did not submit a petition for reassessment by the May 29, 2012, deadline. Instead, on June 11, 2012, petitioner's office manager, Desiré Flack, e-mailed ODOT's auditor, apologizing for the delay in submitting information to ODOT and explaining that she had been out of the office. Two days later, Alban Lang, petitioner's vice president and CFO, e-mailed the auditor stating that Flack had just handed him the February 2012 audit report and asserting that Flack had never told him that she was working with ODOT on the audit. Lang acknowledged that "it is our internal communication issue" but requested leniency and additional time to produce more information.
A few days later, on June 19, Flack filed a petition for reassessment, challenging the amount of tax assessed and asserting that she had not received the official billing. On July 2, an ODOT audit manager responded by letter, stating that ODOT did not believe that the June 19 petition established good cause for failure to timely request a hearing and explaining that a final order would issue shortly.
On July 10, Lang sent ODOT a letter in which he set out the circumstances that he asserted established good cause for failure to timely request a hearing. Most of the points that Lang raised related either to the validity of the audit itself or to communications that occurred between petitioner and ODOT after the May 29, 2012, deadline for requesting reassessment had passed. In addition, however, Lang made the following two assertions:
(Emphasis added.)
ODOT issued its final order on July 18, 2012. That order includes a point-by-point response to Lang's July 10 letter, which ODOT apparently treated and accepted as another petition for reassessment. With respect to the two points from Lang's letter quoted above, the order states:
In addition, the order describes what ODOT views as petitioner's "consistent pattern of late reporting" of its tax reports; the order also observes that petitioner had "significantly delayed in producing records for the audit." The order states that those events
The order goes on to explain that petitioner could "be granted relief from default" only by showing "good cause for [its] failure to file a timely request for reassessment," citing OAR 137-003-0528(1)(b)(A)
Accordingly, the final order dismissed the petition for reassessment.
Petitioner challenges the final order in this court, seeking "reversal of the order and remand for hearing on the issue of good cause for a tardy petition for reassessment." Of the several arguments that petitioner makes in support of that challenge, we address only two related contentions, which are dispositive. First, petitioner argues that ODOT disputed the factual assertions that petitioner raised in explaining why its requests for reassessment were late. In particular, petitioner asserts that the parties disputed whether petitioner ever received the Notice and Billing. Based on that assertion—and based on the parties' agreement that the petition for reassessment functioned as a request for hearing on the Notice and Billing in this case—petitioner argues that OAR 137-003-0528(3) required ODOT to hold a hearing on whether petitioner had good cause for missing the deadline for petitioning for reassessment.
In response, ODOT points out that petitioner never requested a hearing, under OAR 137-003-0528(3), on whether it had established good cause for missing the deadline for petitioning for reassessment. Accordingly, ODOT concludes, petitioner did not preserve its claim that ODOT erred by not holding such a hearing. In addition, ODOT contends that petitioner was not entitled to a hearing because ODOT "did not dispute the facts
We begin with petitioner's argument that it was entitled to a hearing, under OAR 137-003-0528(3), on whether it had good cause for failing to timely file its petition for reassessment. As noted, ODOT contends that that argument is not preserved for judicial review. ODOT acknowledges that petitioner effectively requested a hearing on the Notice and Billing when Lang belatedly petitioned for reassessment in his July 10 letter. ODOT insists, however, that petitioner also was required to request a hearing on good cause for having made the request for a hearing on the Notice and Billing too late. We disagree.
Several aspects of OAR 137-003-0528(3) lead us to conclude that petitioner was not required to separately request a hearing on the good-cause question. We start with the text of the rule, which states that "the agency will provide a right to a hearing on the reasons why the hearing request is late." OAR 137-003-0528(3) (emphasis added). That mandatory language supports petitioner's contention that it was entitled to a hearing on good cause without requesting one. True, the rule refers to "a right to a hearing," not simply to "a hearing," and that reference could be understood to merely require agencies to provide hearings about good cause upon request, and not otherwise. But the rule does not set forth any deadline by which a petitioner must request such a hearing; nor does any other provision of the rule contemplate a process by which a petitioner will request a hearing on the good-cause issue. We hesitate to read the rule to require a hearing request that it does not mention more explicitly.
Moreover, the rule must be considered in its context. OAR 137-003-0528(3) is triggered only after a petitioner has already taken two significant steps to alert an agency that it disagrees with, and seeks to challenge, some proposed agency action. First, the petitioner already will have requested (albeit belatedly) a hearing on the proposed action. Thus, the agency already is aware that the petitioner seeks to contest that action, and will not simply comply with whatever requirements the agency plans to impose on it (e.g., paying a fine or fee, surrendering a license, etc.). Second, the petitioner will have submitted its "explanation of why the request for hearing [on the proposed agency action] is late." OAR 137-003-0528(3). Thus, the agency already is in a position, at that point, to assess whether it "disputes the facts contained in [that] explanation" and, therefore, to determine whether the petitioner is entitled to "a hearing on the reasons why the hearing request is late." Id. An additional hearing request would serve little purpose.
Finally, a petitioner may not be aware that the agency "disputes the facts contained in the [petitioner's] explanation of why the request for hearing is late" until the agency has issued its final order. That is the case here. The final order before us on judicial review is the July 18, 2012, order in which ODOT set out its point-by-point rejection of the excuses for late filing that Lang provided in his July 10 request for reassessment. That is the point at which ODOT may have "dispute[d] the facts contained in [petitioner's] explanation" and it was not until that point, therefore, that petitioner would have reason to believe that it was entitled to a hearing on the good-cause question under OAR 137-003-0528(3). Preservation principles do not apply when an alleged error appeared for the first time in the final order that is the subject of a petition for judicial review. See SAIF v. Matt Jenkins Contracting, 257 Or.App. 46, 60, 306 P.3d 641 (2013) (cross-petitioner "was not required to take affirmative action to preserve error that first arose when the agency issued its order"). For all of those reasons, we reject ODOT's argument that petitioner's argument under OAR 137-003-0528(3) is not preserved for our review.
The flaw in that argument is similar to one that we addressed in Gordon v. Teacher Standards and Practices Comm., 265 Or.App. 722, 337 P.3d 133 (2014). Gordon involved an order on reconsideration issued by the Teacher Standards and Practices Commission (TSPC) that rejected the petitioner's request for a late hearing and for reconsideration of a default order by which the TSPC had suspended the petitioner's teaching license. In her request for reconsideration of the default order, the petitioner had offered an explanation of why she had not requested a hearing on the proposed license suspension. The TSPC's order on reconsideration rejected that explanation, stating that it "was not persuaded by [the petitioner's] submissions in support of [her] late hearing request." Id. at 727, 337 P.3d 133. On judicial review, the petitioner argued that the TSPC should have held a hearing on the question of whether she had established good cause for having filed a late hearing request, citing OAR 137-003-0528(3). The TSPC responded that it was not required to hold a hearing under that rule "because it did not dispute the facts underlying [the] petitioner's explanation of why the request for hearing was late—it only concluded that the offered explanation was legally insufficient to show circumstances beyond [the] petitioner's control." Id. at 728, 337 P.3d 133.
We vacated and remanded the TSPC's order on reconsideration because it was "not sufficient for us to determine whether the agency erred in failing to hold a hearing to consider [the] petitioner's late request for hearing." Id. We explained that the order could be read either to conclude that the petitioner's proffered excuses for the late filing were legally insufficient or to have indicated that the TSPC "disbelieved the facts underlying [the] petitioner's submissions." Id. Emphasizing that it is the agency's "responsibility to explain the reasoning for its order," we vacated the TSPC's order on reconsideration and remanded "the case to the TSPC for it to reconsider its order on reconsideration denying [the] petitioner's request for a late hearing." Id. at 729, 337 P.3d 133.
We reach a similar conclusion here. ODOT's order does not state whether it disputes the factual assertions that petitioner offered in its July 10 petition for reassessment or whether, instead, it concluded that those asserted facts do not establish good cause for the late reassessment request as a matter of law. Moreover, the order is ambiguous on that point. Although ODOT does not explicitly dispute petitioner's assertion that it never received the Notice and Billing, the order includes several statements suggesting that ODOT may have disbelieved that assertion (and others), including:
Those statements lead us to conclude that ODOT may have rejected the late petition for reassessment for either of two reasons. On one hand, ODOT may have disbelieved
To summarize: like the order in Gordon, this order does not give us a way "to determine * * * whether the agency was not persuaded [by the petitioner's explanation for the late hearing request] because it disbelieved the facts underlying petitioner's submissions or because it concluded that those facts, although undisputed, were legally insufficient." 265 Or.App. at 728, 337 P.3d 133. We therefore vacate the final order and remand for reconsideration of petitioner's late request for reassessment, with the same instruction we gave in Gordon:
Id. at 729, 337 P.3d 133.
Vacated and remanded for reconsideration of late petition for reassessment.
OAR 137-003-0528 is included in the Attorney General's Model Rules of Procedure for Contested Cases. With exceptions not pertinent here, ODOT has adopted those model rules. OAR 731-001-0005(1).