Hardy v. State Land Bd.

• Decision Date: 14 October 2015
• Docket Number: 083817Z7,A148195.
• Citation: 274 Or.App. 262,360 P.3d 647
• Parties: Wilbur HARDY and Kathryn Hardy, individuals; Idelle Collins, an individual; Craig Tompkins, an individual; Kirtland Farms 600, LLC, an inactive Oregon limited liability company; Mary Caldwell, an individual; Chris Caldwell, an individual; Caldwell Family, LLC, an Oregon limited liability company; Robert Malloy and Marilyn Malloy, individuals, Petitioners–Respondents, Kirtland Farms, Inc., Petitioner below, v. STATE LAND BOARD, an agency of the State of Oregon; and Department of State Lands, an agency of the State of Oregon, Respondents–Appellants, Association of Northwest Steelheaders, Rogue Riverkeeper, and Northwest Environmental Defense Center, Respondents below.
• Court: Oregon Court of Appeals

274 Or.App. 262

360 P.3d 647

Wilbur HARDY and Kathryn Hardy, individuals; Idelle Collins, an individual; Craig Tompkins, an individual; Kirtland Farms 600, LLC, an inactive Oregon limited liability company; Mary Caldwell, an individual; Chris Caldwell, an individual; Caldwell Family, LLC, an Oregon limited liability company; Robert Malloy and Marilyn Malloy, individuals, Petitioners–Respondents,Kirtland Farms, Inc., Petitioner below,

v. STATE LAND BOARD, an agency of the State of Oregon; and Department of State Lands, an agency of the State of Oregon, Respondents–Appellants,Association of Northwest Steelheaders, Rogue Riverkeeper, and Northwest Environmental Defense Center, Respondents below.

083817Z7

A148195.

Court of Appeals of Oregon.

Argued and Submitted March 7, 2014.

Decided Oct. 14, 2015.

Inge D. Wells, Assistant Attorney General, argued the cause for appellants. With her on the brief were John R. Kroger, Attorney General, and Anna M. Joyce, Solicitor General.

Jennie L. Brickerargued the cause for respondents. With her on the brief were Beverly C. Pearmanand Stoel Rives LLP.

Opinion

ARMSTRONG, P.J.

The State Land Board and the Department of State Lands (collectively, the state) appeal a judgment of the circuit court setting aside the board's declaration of ownership of the bed and banks of the Rogue River between river miles (RM) 68.5 and 157.5¹under the process established in ORS 274.400to 274.412. It also appeals a supplemental judgment awarding petitioners their attorney fees and costs.²The case was resolved by the circuit court on summary judgment in an other than contested case proceeding under ORS 183.484. On appeal, the state challenges the circuit court's ruling that the board's declaration of ownership did not adequately describe the nature and extent of the state's claim, as required by ORS 274.408(1)(a)and OAR 141–121–0040, and that it “claims dry land in violation of Oregon law.” The state also contends that the circuit court erred in rejecting the board's determination that the river was navigable at the time of statehood between river miles 100 and 157.5—a predicate requirement for asserting state ownership to the riverbed.³As to the supplemental judgment, the state contends that the court abused its discretion in awarding attorney fees and costs to petitioners—because the positions taken by the board were “objectively reasonable”—and in determining that a portion of the fee award was mandatory under ORS 183.497(1)(b).

We agree with the circuit court that the board's declaration of ownership fails to satisfy the statutory requirements and, therefore, must be set aside in its entirety on that basis. For reasons of judicial efficiency, however, we also address the state's challenge to the circuit court's decision regarding the underlying navigability of RM 100 to 157.5 because, if that decision is correct—that is, if that segment of the river is not navigable—then the statutory deficiency is irremediable with respect to that segment. As explained below, we affirm the portion of the general judgment setting aside the declaration of ownership, but we reverse and remand the portion holding that the board's determination of navigability as to RM 100 to 157.5 “does not comply with state or federal law and is not supported by substantial evidence in the record.”⁴Given that disposition, we also vacate and remand the supplemental judgment awarding petitioners attorney fees.

I. BACKGROUND

A. Legal Framework

To set this dispute in context, we begin with a brief description of the legal framework for determining state ownership of riverbeds; those principles are examined in greater detail in our analysis of the parties' arguments on appeal.

1. Navigability under federal law

Under what is known as the “equal footing” doctrine, Oregon “gain[ed] title within its borders to the beds of waters then navigable” when it became a state in 1859. PPL Montana, LLC v. Montana,565 U.S. ––––, ––––, 132 S.Ct. 1215, 1227–28, 182 L.Ed.2d 77 (2012)(PPL Montana). And, the state is entitled to “allocate and govern those lands according to state law subject only to ‘the paramount power of the United States to control such waters for purposes of navigation in interstate and foreign commerce.’ ” Id.(quoting United States v. Oregon,295 U.S. 1, 14, 55 S.Ct. 610, 79 L.Ed. 1267 (1935)).⁵Thus, generally, “[l]ands lying below the ordinary high water mark of navigable rivers are * * * owned by the state and are considered to have been so held since the admission of that state to the Union.” Northwest Steelheaders Association v. Simantel,199 Or.App. 471, 480, 112 P.3d 383, rev. den.,339 Or. 407, 122 P.3d 65 (2005), cert. den.,547 U.S. 1003, 126 S.Ct. 1466, 164 L.Ed.2d 247 (2006)(footnote omitted). The United States retains any title vested in it before statehood to land beneath waterways notthen navigable. PPL Montana,565 U.S. at ––––, 132 S.Ct. at 1228.

Whether a river segment is navigable for purposes of determining state riverbed title is a question of federal law. United States v. Oregon,295 U.S. at 14, 55 S.Ct. 610(“Since the effect upon the title to such lands is the result of federal action in admitting a state to the Union, the question, whether the waters within the state under which the lands lie are navigable or non-navigable, is a federal, not a local, one. It is, therefore, to be determined according to the law and usages recognized and applied in the federal courts, even though, as in the present case, the waters are not capable of use for navigation in interstate or foreign commerce.” (Citations omitted.)); United States v. Holt Bank,270 U.S. 49, 55–56, 46 S.Ct. 197, 70 L.Ed. 465 (1926)(“Navigability, when asserted as the basis of a right arising under the Constitution of the United States, is necessarily a question of federal law to be determined according to the general rule recognized and applied in the federal courts”).

The test of navigability for that purpose is well established. In 1870, the United States Supreme Court explained:

“Those rivers must be regarded as public navigable rivers in law which are navigable in fact. And they are navigable in fact when they are used, or are susceptible of being used, in their ordinary condition, as highways for commerce, over which trade and travel are or may be conducted in the customary modes of trade and travel on water.”⁶

The Daniel Ball,77 U.S. (10 Wall.) 557, 563, 19 L.Ed. 999 (1870).⁷Thus, the question of the navigability of a waterway is both factual and legal: whether the river segment is, in fact, navigable, also determines whether it is navigable for the legal purpose of determining state ownership under the equal-footing doctrine.See United States v. Utah,283 U.S. 64, 87, 51 S.Ct. 438, 75 L.Ed. 844 (1931)(navigability is essentially a question of fact determined by the particular circumstances of each case); Loving v. Alexander,745 F.2d 861, 865 (4th Cir.1984)(navigability involves “questions of law inseparable from the particular facts to which they are applied” (citing United States v. Appalachian Elec. Power Co.,311 U.S. 377, 404, 61 S.Ct. 291, 85 L.Ed. 243 (1940))).

2. State process for asserting claim

The State of Oregon has established a mechanism for asserting the state's claim of riverbed ownership under the federal doctrine. SeeORS 274.400—274.412; OAR, ch. 141, div. 121. That process vests in the board “exclusive jurisdiction to assert title to submerged or submersible lands in navigable waterways on behalf of the [state].”⁸ORS 274.402(1). The board may not exercise that authority unless either (1) a court has determined that the waterway is navigable and that determination is final, ORS 274.402(2)(a); or (2) the board has made a declaration under ORS 274.406, ORS 274.402(b). It is the latter process that is at issue in this case.

The statutory scheme requires the board to adopt, by rule, a procedure under which the state “shall make a final administrative determination as to whether a waterway or part of a waterway is navigable, and if so, the extent of the interest claimed by the State of Oregon in the navigable portion of the waterway.” ORS 274.404(1). The board may order the department to make a determination of navigability “if there is sufficient economic justification” for it or “a broad and substantial public interest.” ORS 274.404(2)(a). If so ordered, the department must conduct a study of the issue, ORS 274.404(2)(a), and prepare a draft report for the board “setting forth the department's findings and conclusions as to whether the waterway or part of the waterway under study is navigable and, if so, the extent of the State of Oregon's interest in the waterway or part of the waterway,” ORS 274.404(2)(c). After notice and public hearing, the board may adopt the draft report “if substantial evidence in the record supports the report's findings and conclusions.” ORS 274.404(2)(e). If the board adopts the report, the board “shall declare the nature and extent of the state's claim to any interest that remains or is vested in the State of Oregon with respect to any land or waterway described in the report,” ORS 274.406(1), and give reasonable public notice of the declaration to interested parties, ORS 274.408(1). As particularly relevant in this case, the notice must

“[d]escribe the land or waterway affected and the nature and extent of the state's claim. Such notice need not describe the land or waterway in legal terms, but by the use of common descriptions or maps shall be designed to identify the land or waterway in a manner intelligible to the layperson and useful in establishing the exact location of the state claim in relation to existing legal descriptions.”

ORS 274.408(1)(a); see alsoOAR 141–121–0040(3)(a), (b)(providing that board's written declaration shall “[s]tate[ ] the nature and extent of the state's claim to the land underlying the subject waterway segment” and “[c]learly describe[ ] the location of the land claimed by the state using common ...