Can Oregon DMV sell an exclusive license over its electronic records to another state agency without violating the constitutional rule that highway-related funds can only be spent on highways?
Subject
DMV
Plain-English summary
The Department of Administrative Services (DAS) wanted to take over from a national nonprofit (AAMVA) as the sole digital pipeline through which insurance companies and other "record providers" could pull Oregon driver and vehicle records. DAS planned to charge a per-record convenience fee. Some of that money would cover the actual cost of providing access to DMV records. But DAS also wanted to use part of the fee to fund unrelated electronic-government services. That mixing is what triggered a constitutional question.
Article IX, section 3a of the Oregon Constitution dedicates revenue from motor-vehicle taxes to highway purposes. The AG had previously concluded that DMV records are themselves an asset of the Highway Fund, because Highway Fund money was used to generate them. So if DAS earned net income from selling access to those records and spent it on non-highway purposes, that would divert a Highway Fund asset.
The AG's solution: DMV could license DAS to be the exclusive electronic provider, but only if DMV received fair market value for the license. The Highway Fund had to be made whole at the time of the transfer. The AG warned that a court would scrutinize that valuation closely, and recommended periodic re-valuation if the deal involved ongoing payments.
Currency note
This opinion was issued in 2010. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Common questions
Why does it matter who runs the digital pipeline for DMV records?
Several reasons collided in this opinion. Insurance companies and other authorized recipients pull huge volumes of records (about 140,000 per month at the time). They needed a fast, secure channel. Oregon DMV had been using AAMVANet, a system run by the national association of motor vehicle administrators. DAS wanted to consolidate access to state records under its own e-government portal so it could fund other state digital services from the convenience fees. That fundraising goal is what raised constitutional concerns, because some of the money would no longer flow to highway purposes.
What is "Article IX, section 3a" doing in a question about records?
Article IX, section 3a dedicates revenue from motor-vehicle ownership, operation, and use to "construction, reconstruction, improvement, repair, maintenance, operation and use of public highways." Earlier AG advice and court decisions had extended that to interest, rents, and profits earned on Highway Fund assets. A 1989 letter of advice (OP-6329) treated DMV records themselves as an asset of the Highway Fund, because Highway Fund dollars went into producing them.
Was there a way around the Highway Fund problem?
The AG said yes. Property held by a state agency is normally treated as state property, so a transfer between agencies usually does not require reimbursement. But property bought with constitutionally dedicated Highway Fund money belongs to that fund, not to the state generally. So an inter-agency transfer is allowed if the Highway Fund gets fair market value back. That is the move the AG approved here.
What about ratepayers and consumers?
The AG opinion did not directly address whether the per-record fee would be higher than what record providers had been paying. It noted that DAS's per-record model would likely cost more than AAMVA's annual access model, given Oregon's volume. The opinion's focus was the constitutional Highway Fund question, not the policy choice about whether to consolidate access on the state e-government portal.
Background and statutory framework
DMV records are public records under ORS 802.220(1), with statutory exceptions for "personal information" defined in ORS 802.177 and 802.179. Public bodies generally cannot make a profit on records (ORS 192.440(4)(a)), but the legislature gave DMV specific authority to set "reasonable fees" for furnishing information from various record types (ORS 802.230). For personal information, DMV can charge fees "reasonably calculated to reimburse it for its actual cost in making personal information available" (ORS 802.183).
In 2009, the legislature gave DAS authority to set up an "electronic government portal" through which state agencies could deliver information, products, and services (ORS 182.126(2), 182.132). DAS could charge convenience fees that "reflect the costs incurred in hosting, operating, maintaining or implementing" the portal, and could contract out portal operation to a private provider.
Oregon Supreme Court doctrine on dedicated funds includes State ex rel Sprague v. Straub, 240 Or 272 (1965) (interest on Highway Fund accrues to fund); Rogers v. Lane County, 307 Or 534 (1989); and Cross of Malta Bldg Corp. v. Straub, 257 Or 376 (1970) (state must repay fund with interest if income is diverted). Subsequent AG opinions had concluded that rents and profits from Highway-Fund-acquired property must accrue to the Fund (37 Op Atty Gen 349 (1975); 41 Op Atty Gen 37 (1980)).
Citations
- Oregon Constitution, Article IX, section 3a
- ORS 802.220(1); 802.230; 802.177; 802.179; 802.183
- ORS 192.440(4)(a); ORS 182.126(2); ORS 182.132
- State ex rel Sprague v. Straub, 240 Or 272, 400 P2d 229, 401 P2d 29 (1965)
- Cross of Malta Bldg Corp. v. Straub, 257 Or 376, 476 P2d 921 (1970)
- Rogers v. Lane County, 307 Or 534, 771 P2d 254 (1989)
- Automobile Club of Oregon v. State, 314 Or 479, 840 P2d 674 (1992)
Source
- Landing page: https://www.doj.state.or.us/oregon-department-of-justice/office-of-the-attorney-general/attorney-general-opinions/
- Original PDF: https://www.doj.state.or.us/wp-content/uploads/2010/08/op2010-4.pdf
Original opinion text
JOHN R. KROGER
MARY H. WILLIAMS
Attorney General
Deputy Attorney General
DEPARTMENT OF JUSTICE
GENERAL COUNSEL DIVISION
August 25, 2010
Mr. Tom McClellan, Deputy Director
Driver and Motor Vehicle Services Division
Oregon Department of Transportation
1905 Lana Avenue, NE
Salem, OR 97314
Re: Opinion Request OP-2010-4
Dear Mr. McClellan:
You requested advice about whether the Driver and Motor Vehicles Services Division (DMV) may sell an exclusive license to the Department of Administrative Services (DAS) to provide electronic access to certain DMV records without violating Article IX, section 3, of the Oregon Constitution. DAS would provide access to those records via an "electronic government portal" as defined by ORS 182.126(2), using a virtual private network (VPN) connection or other secure method of transmission agreed to by DAS and DMV. As requested, we do not address statutory impediments to DAS's proposal. This advice is limited to whether the proposal would violate Article IX, section 3a.
QUESTION PRESENTED
Does Article IX, section 3a, of the Oregon Constitution, which requires Highway Fund moneys to be spent only on highway purposes, prohibit DMV from selling DAS an exclusive license to provide electronic access to certain DMV records via an "electronic government portal" as defined by ORS 182.126(2)?
SHORT ANSWER
Article IX, section 3a, of the Oregon Constitution does not prohibit DMV from selling that right to DAS as long as DMV receives fair market value for it.
DISCUSSION
A. DMV Records
With certain exceptions, DMV records are public records and are subject to public disclosure. ORS 802.220(1). Ordinarily, public bodies may not make any net income from making public records available; they are limited to recouping their actual costs. ORS 192.440(4)(a). But the legislature has given DMV specific authority to establish and charge "reasonable fee[s]" for "furnishing information" from DMV records. ORS 802.230. "Furnish" means "to provide or supply with[.]" WEBSTER'S THIRD NEW INT'L DICTIONARY at 923 (2002). The plain meaning of "furnishing information" encompasses all methods of providing or supplying information.
The legislature authorized DMV to set fees for furnishing information from different types of records. See ORS 802.230(1)-(5). Some information in DMV records cannot be disclosed to the public, but is confidential "personal information." ORS 802.177, 802.179. Personal information can be disclosed only to the authorized recipients identified in ORS 802.179. ORS 802.183 authorizes DMV to establish "fees reasonably calculated to reimburse it for its actual cost in making personal information available to authorized recipients." In sum, DMV may charge the "reasonable fee" that it establishes pursuant to ORS 802.230 for furnishing information from a particular record. In addition to that fee, pursuant to ORS 802.183, DMV may charge a fee to recoup any actual costs it incurs in making personal information available to authorized recipients.
Authorized recipients include persons who are in the business of selling personal information to other authorized recipients, primarily insurance companies. ORS 802.179(13). This opinion refers to those persons as "record providers." Record providers regularly receive high volumes of records containing personal information, giving rise to the need for an efficient and secure method of access.
In the past, record providers received records on a special type of cartridge that was delivered by courier. That system was slow and the information was subject to potential security breaches if the cartridge was misplaced or misappropriated. Only a few users still use the cartridge system and DMV wants to phase it out entirely due to the security concerns and the fact that it is becoming difficult to find cartridge manufacturers.
In 2006, DMV created a Real-Time Access to Driver Records program (RADR). Oregon DMV, like the motor vehicle divisions of all other states, is a member of the non-profit American Association of Motor Vehicle Administrators (AAMVA). AAMVA operates and maintains a system called the AAMVANet, which has the capacity to provide secure digital access to state driver and motor vehicle records. In Oregon, most records providers obtain access to DMV records via a dedicated virtual private network (VPN) through the AAMVANet. DMV currently charges two dollars for furnishing driving records via the RADR system.
Initially, one record provider paid $120,000 to build the system. DMV then charged each new customer a onetime fee of $4,500 to connect to DMV systems to access its records electronically via the AAMVANet. AAMVA maintains the secured system and charges users an annual fee of $2,400 for access. DMV receives its two-dollar-per-record fee for records furnished via the AAMVANet. Since DMV does not incur any ongoing actual costs to make personal information available through the AAMVANet, it does not charge any additional fees to provide the personal information through the AAMVANet.
B. Electronic Government Portal
Oregon Law 2009, chapter 829 (House Bill 2146), gives DAS the authority to establish an "electronic information delivery system accessible by means of the Internet * * * by which * * * state agenc[ies] deliver[] information, products or services." ORS 182.132(1), 182.126(2). DAS may charge users a convenience fee for access which "must reflect the costs incurred in hosting, operating, maintaining or implementing the electronic government portal." ORS 182.132(3)(a). DAS may also contract out the development and operation of the portal and, if it does, may authorize the portal provider to charge convenience fees. DAS intends to do that.
DAS would like to replace AAMVA as the sole supplier of real-time digital access to Oregon DMV records pursuant to the authority provided in House Bill 2146. As we understand it, DAS proposes to charge a per-record fee for access, rather than an annual access fee like AAMVA. Given the high volume of records that record providers receive (DMV sells around 140,000 electronic records per month, approximately 75 percent of its total records sales), a per-record fee likely would result in higher fees than record providers currently pay AAMVA. DAS intends the convenience fee to fund the DMV VPN connection or other secure method of records access transmission agreed to by DAS and DMV as well as the creation, transition, ongoing operation and maintenance of current and new Oregon E-Government portal services and potentially to help fund its other electronic government portals and services.
It is the latter intention that raises a constitutional concern. Specifically, if the convenience fee that DAS (or its contractor) charges record providers merely covers the costs of providing them with electronic access to personal information, there is no net income from the charge. The charge would merely recoup actual costs to furnish the personal information to record providers. But if the charge, in addition to covering those costs, also is used to fund the provision of other services, it would yield net "income." The receipt of net income from a transaction involving a Highway Fund asset and its expenditure on a non-highway purpose implicates Article IX, section 3a.
C. Article IX, Section 3a
Article IX, section 3a, of the Oregon Constitution dedicates "any tax or excise on the ownership, operation or use of motor vehicles" exclusively to highway purposes. The people's intent in adopting that provision was to guarantee that the state would not divert any of the proceeds of those taxes to fund non-highway purposes. State ex rel Sprague v. Straub, 240 Or 272, 400 P2d 229, 401 P2d 29 (1965); Rogers v. Lane County, 307 Or 534, 771 P2d 254 (1989); Automobile Club of Oregon v. State of Oregon, 314 Or 479, 840 P2d 674 (1992). Accordingly, Article IX, section 3a requires the proceeds of those taxes to be spent exclusively for highway purposes. State ex rel Sprague v. Straub, 240 Or at 277. If the state diverts income generated by a constitutionally dedicated fund asset to another purpose it must repay the fund with applicable interest. Cross of Malta Bldg Corp. v. Straub, 257 Or 376, 476 P2d 921 (1970), 479 P2d 505 (1971).
The Oregon Supreme Court has held that the interest earned on the investment of highway funds must accrue to the Highway Fund. State ex rel Sprague v. Straub, 240 Or at 281. Subsequent Attorney General opinions have concluded that the rents and profits received on property purchased with highway funds also must accrue to the Fund, reasoning that rents and profits are analogous to interest earnings, because they, too, are "the fruits of investment of moneys in the Highway Fund." 37 Op Atty Gen 349, 356 (1975); see also, 41 Op Atty Gen 37, 42 (1980).
This office has determined that DMV records are assets of the Highway Fund, because "[a]s part of its costs of administration [DMV] uses moneys from this dedicated Highway Fund to generate records." Letter of Advice dated June 16, 1989, to Robert N. Bothman, Director of Transportation (OP-6329) at 1. Consequently, net income generated from the sale of those records must accrue to the Highway Fund and cannot lawfully be diverted to other purposes. Id. at 2.
As discussed, DAS's proposal is expected to generate net income from providing electronic access to DMV records and that income may be used to fund other electronic government services. To avoid a constitutional impediment, DAS proposes to enter into a licensing or other agreement whereby DMV authorizes DAS to be the exclusive provider of electronic access to the DMV records in consideration of the receipt of fair market value. You ask whether Article IX, section 3a would prohibit that agreement.
Ordinarily, when a state agency acquires property it does so on behalf of the state and acts as custodian of state property, rather than as the owner. Letter of Advice dated January 5, 1979, to Laurence Sprecher, Manager, Executive Department (OP-4479) at 1. If the state owns the property, there is no need for reimbursement when the custodian agency transfers the asset to another state agency. But when property is acquired with constitutionally dedicated Highway Fund moneys, the property is an asset of that Fund and not of the state generally. Thus the Fund must be reimbursed for the fair market value of the property at the time of the transfer. Id.
Accordingly, DMV may transfer the proposed exclusive license to DAS without offending Article IX, section 3a, so long as it receives fair market value for the license. But a court would likely closely scrutinize such a transfer to ensure that the Highway Fund receives the amount to which it is entitled. Accordingly, DMV and DAS should pay close attention to determining the correct fair market value and should periodically review that determination if the agreement involves ongoing payments.
Sincerely,
David E. Leith
Associate Attorney General and
Chief General Counsel
General Counsel Division
DEL:naw:clr/DM2203395