Kinzua Res., LLC v. Or. Dep't of Envtl. Quality

• Citation: 468 P.3d 410,366 Or. 674
• Decision Date: 09 July 2020
• Docket Number: SC S066676
• Parties: KINZUA RESOURCES, LLC, an Oregon limited liability company; Frontier Resources, LLC, an Oregon limited liability company; ATR Services, Inc., an Oregon corporation; and Gregory M. Demers, an individual, Respondents on Review, v. OREGON DEPARTMENT OF ENVIRONMENTAL QUALITY, an agency of the State of Oregon; and Oregon Environmental Quality Commission, an agency of the State of Oregon, Petitioners on Review.
• Court: Supreme Court of Oregon

366 Or. 674

468 P.3d 410

KINZUA RESOURCES, LLC, an Oregon limited liability company; Frontier Resources, LLC, an Oregon limited liability company; ATR Services, Inc., an Oregon corporation; and Gregory M. Demers, an individual, Respondents on Review,

v.OREGON DEPARTMENT OF ENVIRONMENTAL QUALITY, an agency of the State of Oregon; and Oregon Environmental Quality Commission, an agency of the State of Oregon, Petitioners on Review.

SC S066676

Supreme Court of Oregon, En Banc.

Argued and submitted January 13, 2020.

July 9, 2020

Inge D. Wells, Assistant Attorney General, Salem, argued the cause and filed the briefs for petitioners on review. Also on the briefs were Ellen Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.

Julie A. Weis, Haglund Kelley LLP, Portland, argued the cause and filed the brief for respondents on review. Also on the brief was Michael E. Haglund, Portland.

FLYNN, J.

If a landfill has become inactive and the permit holder has failed to properly close it, then other persons "owning or controlling" the landfill site must fulfill obligations related to proper closure. ORS 459.205 ; ORS 459.268. The dispute in this case arises out of an order of the Environmental Quality Commission, which concluded that petitioners were persons "controlling" an inactive landfill site and imposed liability on them for failing to perform the statutory closure requirements. At issue here is whether the legislature intended that the category of persons "controlling" the landfill site would extend to those having the legal authority to control the site—as the commission concluded—or would be limited to "those persons actively involved in the operation or management of a landfill site"—as the Court of Appeals concluded in this case. Kinzua Resources v. DEQ , 295 Or. App. 395, 408-09, 434 P.3d 461 (2018), adh'd to on recons. , 296 Or. App. 487, 437 P.3d 331 (2019). We allowed review of the decision of the Court of Appeals, and we now conclude that the legislature intended the category of persons "controlling" the site to include persons having the authority to control the site, regardless of whether that authority has been exercised. We remand to the Court of Appeals to consider petitioners’ remaining challenges to the order in light of the correct legal standard.

I. FACTS

For purposes of our review of the legal issue, we take our statement of relevant facts from those found by the commission. Kinzua Resources LLC was both the permit-holder for Pilot Rock Landfill and the owner of the landfill site. Petitioners are the two members of Kinzua—Frontier Resources, LLC and ATR Services, Inc.¹ —as well as Gregory Demers, who is a member of Frontier and the president of ATR.²

Kinzua obtained a permit from the Department of Environmental Quality (DEQ) in 2006 to operate the landfill as a disposal site for waste from an adjacent sawmill. Both the terms of the permit and OAR 340-095-0090 required Kinzua to maintain financial assurance (commonly insurance or a bond) in an amount sufficient to cover the anticipated costs of eventual closure and post-closure maintenance of the landfill. But Kinzua failed to secure the required financial assurance. As a result, DEQ issued a Notice of Civil Penalty Assessment and Order to Kinzua for the financial assurance violation in July 2010, while the landfill was still operating.

Later in 2010, the landfill accepted its last delivery of waste, but Kinzua failed to fulfill the requirements for closing a landfill that has stopped receiving waste. Also in 2010, Frontier and ATR determined that Demers should respond to inquiries from DEQ about the landfill, and Demers acted as the exclusive contact with DEQ regarding issues related to the financial assurance violation and issues related to surface fires that erupted on the landfill site in the summers of 2010 and 2011.

In July 2011, Kinzua was administratively dissolved by the Secretary of State and remained dissolved until September 2013, at which point the Secretary of State retroactively reinstated the LLC to active status. During the time period that Kinzua was in dissolved status, DEQ issued an Amended Notice of Civil Penalty Assessment and Order charging Kinzua, as well as the three petitioners, with violations of both the financial assurance requirement and the landfill closure requirements.

Following a contested case hearing, the Environmental Quality Commission issued an order concluding that Kinzua violated ORS 459.268 by failing to close the landfill, violated OAR 340-095-0090 by failing to secure sufficient financial assurance, and violated OAR 340-095-0050(1) by failing to apply for a "closure permit."³ The commission assessed a total penalty of $782,862; the vast majority of that amount came from DEQ's calculation of the economic benefit "gained by Kinzua in avoiding the cost of closing the landfill."

In addition, the commission concluded that Frontier, ATR, and Demers were responsible for the same violations as persons "controlling" the landfill, and it assessed a civil penalty against them "in the same amount and manner as Kinzua Resources LLC." The commission reasoned that "controlling" includes having authority to control and found that all three petitioners met that test. With respect to Demers, the commission found that he "had actual control of matters relating to the landfill site and that he exercised that control." With respect to ATR and Frontier, the commission found that they had the authority, as the members of Kinzua, "to control the property of the company, including the landfill."

Petitioners sought review of the commission's decision in the Court of Appeals, arguing that the statutory phrase "controlling the disposal site" should be construed as "akin to being an operator" and that none of the petitioners factually met that test. The Court of Appeals agreed with petitioners’ statutory construction argument. That court held that "controlling" in ORS 459.205 and ORS 459.268 "means actually exercising ‘restraining or directing influence’ over a landfill site or the property on which it is located, and not merely having the authority to do so or communicating on behalf of an entity exercising such control." Kinzua Resources , 295 Or. App. at 397, 434 P.3d 461 (footnote omitted). The court then remanded to the commission to consider the evidence in light of that definition of "controlling." Id. at 409, 434 P.3d 461.

II. DISCUSSION

As set out above, the issue in this case requires us to determine whether the Court of Appeals and petitioners are correct that the legislature, in imposing duties on the person "controlling the disposal site," intended to reach only persons "actually exercising" control over the site.⁴ The disputed phrase appears in two statutes that we construe in this case. The first statute, ORS 459.205, imposes various obligations on a "person owning or controlling" a disposal site to obtain permits. The second statute, ORS 459.268, requires "the person owning or controlling the property" to close and maintain the disposal site appropriately, if the permit holder has failed to comply with the closure requirements.⁵

A. Standard of Review

Our review of the commission's final order in this contested case is governed by the Administrative Procedures Act. ORS 183.480(2). If—as the Court of Appeals concluded here—an agency has "erroneously interpreted a provision of law," and a correct interpretation "compels a particular action," then we must set aside or modify the order or remand the case to the agency for further action. ORS 183.482(8)(a). Our standard of review requires us to first determine whether "controlling" is an exact term, an inexact term, or a delegative term, because the answer to that question determines whether the court gives weight to the commission's construction of the term. See, e.g. , Penn v. Board of Parole , 365 Or. 607, 627, 451 P.3d 589 (2019) (discussing framework for when court will and will not defer to agency interpretation of statute); Coos Waterkeeper v. Port of Coos Bay , 363 Or. 354, 360-61, 423 P.3d 60 (2018) (setting out framework). The parties agree, as do we, that "controlling" is an inexact term: It expresses a complete legislative meaning, albeit with less precision than is true of an exact term. see Penn , 365 Or. at 627, 451 P.3d 589 (" ‘Inexact’ terms embody a complete expression of the legislature's intentions, but those intentions are not evident, and it is for the courts to interpret them and the legislative policy they convey, and then to decide whether the agency action conforms to that policy."). Accordingly, we construe the term without deference to the commission's interpretation, following the framework described in State v. Gaines , 346 Or. 160, 171-72, 206 P.3d 1042 (2009). Coos Waterkeeper , 363 Or. at 360-61, 423 P.3d 60.

B. Statutory Construction

When applying our framework for construing a statute, the "paramount goal" is to discern the intention of the legislature. Gaines , 346 Or. at 171, 206 P.3d 1042 ; ORS 174.020(1)(a). In pursuing that goal, we give primary weight to the text and context of the disputed statutory terms. Gaines , 346 Or. at 171, 206 P.3d 1042. As we emphasized in Gaines , "there is no more persuasive evidence of the intent of the legislature than ‘the words by which the legislature undertook to give expression to its wishes.’ " Id . (quoting State ex rel Cox v. Wilson , 277 Or. 747, 750, 562 P.2d 172 (1977) ). But we also consider legislative history "for what it's worth." 346 Or. at 171, 206 P.3d 1042.

1. The meaning of "controlling" suggested from its common usage

The words that give expression to the legislature's wishes, at issue here, are set out in ORS 459.205 and ORS 459.268. The first provides:

"(1) Except as provided by ORS 459.215, a disposal site shall not be established, operated, maintained or substantially altered, expanded or improved, and a change shall not be made in the method or type of disposal at a

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