Friends of the Columbia Gorge v. Energy Facility Siting Council

• Decision Date: 10 December 2020
• Docket Number: SC S065478
• Citation: 367 Or. 258,477 P.3d 1191
• Parties: FRIENDS OF THE COLUMBIA GORGE, Northwest Environmental Defense Center, Oregon Natural Desert Association, Oregon Wild, Hood River Valley Residents Committee, Columbia Riverkeeper, Wildlands Defense, Greater Hells Canyon Council, and Oregon Coast Alliance, Petitioners, v. ENERGY FACILITY SITING COUNCIL and Oregon Department of Energy, Respondents.
• Court: Oregon Supreme Court

367 Or. 258

477 P.3d 1191

FRIENDS OF THE COLUMBIA GORGE, Northwest Environmental Defense Center, Oregon Natural Desert Association, Oregon Wild, Hood River Valley Residents Committee, Columbia Riverkeeper, Wildlands Defense, Greater Hells Canyon Council, and Oregon Coast Alliance, Petitioners,

v.ENERGY FACILITY SITING COUNCIL and Oregon Department of Energy, Respondents.

SC S065478

Supreme Court of Oregon, En Banc.

December 10, 2020

Gary K. Kahn, Reeves, Kahn, Hennessy & Elkins, Portland, submitted the petition for attorney fees and the reply to the objection to petition for attorney fees for petitioners. Also on the filings were Nathan J. Baker and Steven D. McCoy, Friends of the Columbia Gorge, Portland, and Peter M. Lacy, Oregon Natural Desert Association, Portland.

Nathan J. Baker, Friends of the Columbia Gorge, Portland, submitted the petition for costs and disbursements and the reply to the objection to the petition for costs and disbursements for petitioners.

Denise G. Fjordbeck, Assistant Attorney General, Salem, submitted an objection to the petition for attorney fees and an objection to the petition for cost and disbursements for respondents. Also on the filings were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.

BALMER, J.

This is an attorney fee dispute arising out of an administrative rules challenge. Petitioners successfully challenged rules adopted by the Energy Facility Siting Council that amended the process for reviewing requests for amendment (RFAs) to site certificates. Friends of Columbia Gorge v. Energy Fac. Siting Coun. , 365 Or. 371, 446 P.3d 53 (2019). Petitioners now seek $299,325.64 in attorney fees under ORS 183.497. The council asks the court to award no fees. For the reasons explained below, we award petitioners $31,633 in attorney fees.¹

I. BACKGROUND

Petitioners challenged the council's rules on three procedural grounds and two substantive grounds. The court rejected two of the procedural challenges that petitioners raised, which addressed whether the council had to respond to certain comments and whether the council had adequately circulated copies of the proposed rules. 365 Or. at 378-87, 446 P.3d 53. The court, however, agreed with petitioners’ third procedural challenge, concluding that the council had not substantially complied with ORS 183.335(3)(d) when it failed to state how it would determine whether the rules were accomplishing the council's rulemaking objectives. Id. at 387-90, 446 P.3d 53. Because, in adopting the rules, the council had failed to substantially comply with a procedural requirement in ORS 183.335, the court held that all the rules were invalid. Id. at 390, 446 P.3d 53.

To provide appropriate direction to the parties for any future rulemaking, the court then addressed petitioners’ two substantive objections. First, the court rejected petitioners’ claim that the council had exceeded its statutory authority by permitting its staff to determine, with respect to RFAs, whether there would be a public hearing and whether the public could request a contested case proceeding. Id. at 390-94, 446 P.3d 53. Second, the court agreed with petitioners that the council had adopted rules improperly limiting judicial review of RFAs that were not subject to contested case proceedings. Id. at 394-95, 446 P.3d 53.

Thus, petitioners prevailed on two of the five challenges that they raised: one procedural challenge (failing to state how the council would determine whether the rules accomplished the its rulemaking objectives) and one substantive challenge (limiting judicial review). Based on petitioners’ successful challenges, the court invalidated the rules.

II. ANALYSIS

A petitioner who successfully challenges the validity of an administrative rule, as petitioners have done in this case, may obtain mandatory or discretionary reasonable attorney fees under ORS 183.497(1). Petitioners argue that they are entitled to mandatory fees and, in the alternative, to discretionary fees. The council contests both arguments.

A. Mandatory Fees

Mandatory fees are available if "the state agency acted without a reasonable basis in fact or in law." ORS 183.497(1)(b). That provision is subject to an exception, however, allowing the court to deny fees if it "finds that the state agency has proved that its action was substantially justified or that special circumstances exist that make the allowance of all or part of the attorney fees unjust." Id. Petitioners contend that, as to the two issues on which it prevailed, the council took positions without a reasonable basis in law. The council disagrees, noting that, although it lost on two issues in this court, not every losing position taken by an agency is an unreasonable one. See 1000 Friends v. LCDC , 293 Or. 440, 443, 649 P.2d 592 (1982) ("The use of the word ‘reasonable’ reflects a legislative recognition that agencies, like others, can make reasonable mistakes of law."). The council maintains that the positions that it took with respect to the two issues on which it lost were reasonable, even if unavailing.

We agree with the council that its position on the procedural issue was reasonable. As noted above, this court held that the council failed to substantially comply with ORS 183.335(3)(d), which, under certain circumstances, requires an agency to provide "a statement of how the agency will subsequently determine whether the rule is in fact accomplishing [its] objective."

The council did not dispute that it was required to provide such a statement. Instead, the council maintained that it substantially complied with that requirement because, at a rulemaking hearing, council members discussed potential options for tracking whether the rules were accomplishing their objectives. For example, council members asked staff how they might track whether the new amendment processes were serving their intended purpose of enhancing efficiency and public participation. Staff informed the council that it would be able to observe how staff is handling requests for amendment as they are processed and that, after some time, staff could gather input from those affected by the rules and report that input to the council. Friends of Columbia Gorge , 365 Or. at 388, 446 P.3d 53.

The council contended that, although it never took the next step of affirming the staff's proposal, those discussions at the hearing were sufficient to substantially comply with the statute. The council based that contention on the fact that the staff suggestions were the most obvious way to track the success of the rules, that no participants, including petitioners, offered (nor did the council seek) other ways of assessing the new rules, and that those two facts combine to impliedly suggest the council's intentions, which amounts to substantial compliance. This court rejected that argument, but that was not an unreasonable position for the council to advance, particularly in the absence of any prior appellate court decision on the scope of ORS 183.335(3)(d) and given the "substantial compliance" standard that applies to that provision. As a result, petitioners are not entitled to mandatory fees based on the council's failure to substantially comply with ORS 183.335(3)(d).

With regard to the second issue—the council's rules that improperly limited judicial review of amendment orders—we agree with petitioners and conclude that the council acted without a reasonable basis in law. The challenged rules had stated that, as to orders on RFAs that did not go through contested case proceedings, the right to seek judicial review was limited to those who provided comments during the council's consideration of an application and only as to issues on which they provided comment. Friends of Columbia Gorge , 365 Or. at 394, 446 P.3d 53.

The council offered no statutory basis for its authority to limit judicial review in that way. Although the challenged rules applied to the review of orders that had not gone through contested case proceedings, the council relied only on ORS 469.403(2), a statute that similarly limited review of orders that had gone through contested case proceedings. The council maintained that contested cases are usually more complicated than noncontested cases. So, according to the council, it would not make sense to limit the availability of review in complicated contested cases, but not also limit the availability of review in less complicated noncontested cases. The council, therefore, relied on the statute limiting the availability of review for contested cases to similarly limit the availability of review for noncontested cases.

Regardless of what makes sense to the council or what it thinks would be more reasonable, it is not possible to read the statute that way. The statutory provision that the council relied on expressly applies to "contested case proceedings" and does not address noncontested case proceedings. No specific statutory provision expressly addresses who may seek judicial review of noncontested case proceedings involving an RFA. As result, the judicial review of noncontested case proceedings involving RFAs is governed by the catchall provision, ORS 469.403(6), which provides that, unless otherwise indicated, "the review by the Supreme Court shall be the same as the review by the Court of Appeals described in ORS 183.482." And ORS 183.482 allows judicial review to be sought by, among others, "a person adversely affected or aggrieved by the agency order." ORS 183.482(2). That statutory text is not susceptible to an interpretation that could justify the council's rules limiting the availability of judicial review beyond that. As we noted in our initial decision, the council's position lacked any "grounding in the statutory text, context, or legislative history[.]" Friends of Columbia Gorge , 365 Or. at 395, 446 P.3d 53. We therefore conclude that the council's position had no reasonable basis in the law and, as a result, hold that petitioner...