Can an Oregon municipality hire a private entity to administer and enforce its building inspection program?

Plain-English summary

In March 2019, the Oregon Department of Consumer and Business Services (DCBS) asked the Attorney General whether municipalities could outsource their building inspection programs to private entities, for example, contracting with a private firm to perform building permit reviews, code inspections, and code enforcement that have traditionally been done by city or county building officials.

AG Ellen Rosenblum's opinion was nuanced. Yes in part, no in part:

1. The nondelegation doctrine does not flatly prohibit private contracting. Oregon's nondelegation doctrine, rooted in the state Constitution, requires that public bodies exercising legislatively granted governmental power retain enough control to guard against unaccountable exercise of that power. It does not prohibit hiring private entities at all.

2. Private entities can perform some building inspection duties. Hiring a private firm for plan review, certain inspections, or specialty work is permissible, as long as adequate safeguards exist: clear standards, public-body decision-making on the consequential calls, ongoing oversight, the ability to fire the contractor, and a meaningful review mechanism.

3. The seven-factor nondelegation analysis. The opinion identifies the factors a court would consider:
   - The level of decision-making reserved to the public body.
   - The oversight exercised by the public body.
   - The degree of self-interest of the private entity.
   - The specificity of standards governing the private entity's conduct.
   - The character of the governmental functions being performed.
   - The ability of the public body to hire and fire the entity.
   - The extent of review allowed.

4. The current statutory scheme does not permit full outsourcing. ORS chapter 455 places "general supervision" of the state building code with the DCBS director, allows municipalities to administer and enforce a local building inspection program, and requires a municipality that does so to "appoint a person to administer and enforce the program, who shall be known as the building official." The AG read those provisions to require that a municipality retain the building official function and the policy-setting role; it could not contract out the entire program to a private firm.

The opinion came at a time when some Oregon cities and counties were considering broader privatization of building inspection services to handle workload spikes. The opinion gave municipalities a framework for partial outsourcing while drawing a clear line against complete privatization.

Currency note

This opinion was issued in 2019. 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.

In particular, ORS chapter 455 has been amended several times since 2019, and the building inspection rules at OAR chapter 918 are subject to ongoing rulemaking. Anyone relying on this opinion should check the current statutes, OAR provisions, and any subsequent AG guidance.

Historical summary by audience (as of the opinion's 2019 issuance)

What the opinion meant for Oregon municipalities

Cities and counties considering outsourcing building inspection had a clear framework. Hire a private firm for plan review or for specialty inspectors? Allowed, with proper safeguards. Hand the whole program to a private firm and let the city's building official act as a figurehead? Not allowed. The "building official" had to be a real public-body decision-maker with policy authority, not a rubber-stamp.

What the opinion meant for private inspection firms

There was a market in Oregon for private firms to support municipal building inspection programs, but the work had to fit within the seven-factor framework. Specifications: clear, written, public standards. Decision-making: the city retains the consequential calls. Self-interest: the firm cannot be inspecting a project it has a financial stake in. Termination: the city must be able to fire the firm. A bid that proposed to substitute the firm for the entire municipal program was facially noncompliant.

What the opinion meant for DCBS

The opinion supported DCBS's role in supervising the statewide framework. DCBS could continue to permit municipal building inspection programs, but the AG's reading of the statute meant DCBS should not approve programs that effectively transferred the entire administration to a private firm.

What the opinion meant for construction permit applicants

The opinion preserved the public accountability of building inspection. A homeowner or developer aggrieved by an inspection decision could still seek review by the city's building official (a public body decision-maker), not just by the private contractor that did the on-site work. That preserved appellate avenues that pure privatization might have collapsed.

Common questions

Q: What is the "nondelegation doctrine" in Oregon?
A: In Oregon, the nondelegation doctrine prevents a public body from giving away its legislatively granted decision-making authority in a way that leaves the actual decisions to be made by an unaccountable private actor. It does not prevent contracting with private parties for support or specialized services. The line is between advisory or supportive private participation (allowed) and decisional private participation without public oversight (not allowed).

Q: What are the seven factors a court would consider?
A: As listed in the opinion: (1) the level of decision-making reserved to the public body, (2) the oversight exercised by the public body, (3) the degree of self-interest of the private entity, (4) the specificity of standards governing the private entity's conduct, (5) the character of the governmental functions being performed, (6) the ability of the public body to hire and fire the entity, and (7) the extent of review allowed. The factors are evaluated together; no single factor is dispositive.

Q: Could a municipality hire a private firm to do all the on-site inspections?
A: The opinion did not draw a bright line at any specific scope, but it required that the public body retain decision-making authority. On-site inspection work followed by public-body decisions on consequential calls (issuing permits, revoking them, citing violations) is the structure that fits the framework. A model where the private firm makes the consequential decisions and the public body is just a paymaster does not.

Q: What does ORS chapter 455 say specifically?
A: ORS 455.100 places general supervision of the state building code with the DCBS director. ORS 455.110(1) gives the director enforcement authority. ORS 455.148(1)(a) and ORS 455.150(1) allow municipalities to administer and enforce local building inspection programs. ORS 455.010(5) defines "municipality." The AG read these provisions together to require that a municipality, if it administers a program, retain the building official function as a public-body role.

Q: What about home-rule cities?
A: The opinion specifically noted that the analysis was framed in the context of "a comprehensive statutory scheme enacted by the state legislature" and did not address what standard would apply to ordinances enacted by home-rule cities acting solely under their home-rule authority. The home-rule question was reserved.

Background and statutory framework as of 2019

The statutory architecture

The Oregon Building Code is administered statewide by DCBS. The DCBS director has general supervision and enforcement authority. Municipalities can apply to administer a local building inspection program under ORS 455.148(1)(a) and ORS 455.150(1). A municipality that does so must appoint a building official who is responsible for code enforcement, including issuance of building permits.

The constitutional layer

The Oregon Constitution's nondelegation doctrine is a body of state-court case law, not a single textual provision. It draws on the principle that public bodies cannot abandon their public-accountability role by contracting their decision-making out to private parties. The doctrine is generally permissive of private contracting for support, advisory, or specialized services, but it requires meaningful public oversight when the contractor's work touches the exercise of governmental power.

The opinion's analytical move

The AG combined the constitutional nondelegation framework with the statutory architecture. The Constitution allowed private contracting with safeguards; the statute required a municipal building official with substantive authority. Together, the two layers permitted partial outsourcing but required the public body to retain the policy-setting and consequential-decision role.

Citations and references

Statutes (as cited in the 2019 opinion; verify current text):
- ORS 455.010 (definitions)
- ORS 455.100 (DCBS supervision of state building code)
- ORS 455.110 (DCBS enforcement authority)
- ORS 455.148 (municipal administration and enforcement)
- ORS 455.150 (municipal building program authorization)

Source

• Index 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/2019/03/op8296.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

ELLEN F. ROSENBLUM
ATTORNEY GENERAL

FREDERICK M. BOSS
DEPUTY ATTORNEY GENERAL

DEPARTMENT OF JUSTICE
Justice Building
1162 Court Street NE
Salem, Oregon 97301-4096
Telephone: (503) 378-4400

March 14, 2019

No. 8296

This opinion responds to questions from the Department of Consumer and Business Services (DCBS) about municipalities' use of private entities to administer and enforce the building code.

QUESTIONS AND SHORT ANSWERS

QUESTION 1: Does the Oregon Constitution limit the ability of public bodies to hire private entities to administer and enforce governmental power?

SHORT ANSWER: Yes. The nondelegation doctrine provides that public bodies exercising governmental power granted by the legislature must retain sufficient control to guard against the unaccountable exercise of that power.

QUESTION 2: Does the nondelegation doctrine prevent municipalities from hiring private entities to administer and enforce at least some of the duties of a building inspection program?

SHORT ANSWER: No. The nondelegation doctrine does not inherently prohibit the hiring of private entities to perform governmental functions. It does not inherently prohibit municipalities from hiring private entities to perform at least some of the duties of a building inspection program, as long as adequate safeguards exist. (Because we have been asked this question in the context of a comprehensive statutory scheme enacted by the state legislature, we do not address what standard applies to ordinances enacted by local governments acting solely under home rule.)

QUESTION 3: What factors are relevant to the nondelegation analysis when hiring private entities to perform governmental functions?

SHORT ANSWER: The level of decision-making reserved to the public body, the oversight exercised by the public body, the degree of self-interest of the private entity, the specificity of standards governing the private entity's conduct, the character of the governmental functions being performed, the ability of the public body to hire and fire the entity, and the extent of review allowed.

QUESTION 4: Does the current statutory scheme permit a municipality to hire a private entity to administer and enforce an entire building inspection program?

SHORT ANSWER: No. The statutory scheme allows a municipality to administer and enforce a building inspection program, and does not expressly or impliedly allow the administration and enforcement to be entirely contracted out.

DISCUSSION

I. Background

The director of DCBS has general supervision over the administration and enforcement of the state building code. The director may allow municipalities to administer and enforce a local building inspection program. When a municipality assumes this role, it must "appoint a person to administer and enforce the program, who shall be known as the building official." The building official "attend[s] to all aspects of code enforcement, including the issuance of all building permits." Building inspection programs also involve the use of specialty inspectors and plan reviewers. Reviewers ensure that any plans comply with the code and local conditions before construction begins.

II. The Nondelegation Doctrine

Oregon's nondelegation doctrine derives from the Oregon Constitution and provides that public bodies exercising governmental power granted by the legislature must retain sufficient control to guard against the unaccountable exercise of that power. The doctrine is not an absolute prohibition on private contracting for governmental functions. Rather, it is a requirement that public bodies retain meaningful decision-making authority and oversight when private entities perform work that involves governmental power.

III. Application to Building Inspection Programs

A. The doctrine does not flatly prohibit private participation.

The nondelegation doctrine does not inherently prohibit a municipality from hiring private entities to perform at least some of the duties of a building inspection program. The question is whether adequate safeguards exist to ensure that the public body retains decision-making authority and meaningful oversight.

B. Relevant factors.

In evaluating whether private participation in a governmental function complies with the nondelegation doctrine, the relevant factors include:

1. The level of decision-making reserved to the public body.
2. The oversight exercised by the public body.
3. The degree of self-interest of the private entity.
4. The specificity of standards governing the private entity's conduct.
5. The character of the governmental functions being performed.
6. The ability of the public body to hire and fire the entity.
7. The extent of review allowed.

These factors are evaluated together. No single factor is dispositive. A municipality contracting with a private firm for plan review or specialty inspection work would generally be on solid footing if it retains the building official as a public-body decision-maker, sets clear written standards, exercises meaningful oversight, retains the ability to terminate the contract, and provides for review of the private contractor's work.

C. The statutory scheme does not permit full outsourcing.

The current Oregon statutory scheme allows a municipality to administer and enforce a building inspection program, but does not expressly or impliedly allow the administration and enforcement to be entirely contracted out. The statutes require a municipal building official, and the building official's function — code enforcement and building permit issuance — is a public-body role that cannot be wholly transferred to a private firm.

CONCLUSION

The Oregon Constitution's nondelegation doctrine permits municipalities to hire private entities to perform some of the duties of a building inspection program, subject to adequate safeguards. The current Oregon statutory scheme, however, does not permit a municipality to hire a private entity to administer and enforce an entire building inspection program. The municipality must retain the building official function and the policy-setting and consequential-decision authority that goes with it.

Sincerely,

ELLEN F. ROSENBLUM
Attorney General