Mendieta v. State, By and Through Div. of State Lands

• Decision Date: 25 June 1997
• Citation: 941 P.2d 582,148 Or.App. 586
• Parties: Lazaro and Vivian MENDIETA, William and Ann Tracy, LX Ranch, Inc., Beaty Butte Grazing Association, an unincorporated association of individuals and companies, Donald G. Toelle, and Jenkins Ranch, Inc., for themselves individually and for all other persons similarly situated, Respondents-Cross-Appellants-Cross-Respondents, v. STATE of Oregon, acting By and Through the DIVISION OF STATE LANDS, Respondent-Cross-Appellant-Cross-Respondent, and Michele McKay, for herself, and on behalf of her minor children, Erin and Allison McKay, Kristoen Winkle, for herself, and on behalf of her minor children, Regina, Justin and Garrison Winkle, Dee Stryker Coleman, for herself, and on behalf of her minor children, Sydney Meryl and Zane Stryker Coleman, Rest the West, an Oregon nonprofit corporation, Oregon Natural Desert Association, an Oregon nonprofit corporation, and Oregon Natural Resources Coalition, an Oregon nonprofit coalition, Appellants-Cross-Respondents. 94-04-10725-E; CA A87490.
• Court: Oregon Court of Appeals

Page 582

941 P.2d 582

148 Or.App. 586

Lazaro and Vivian MENDIETA, William and Ann Tracy, LX Ranch Inc., Beaty Butte Grazing Association, an unincorporated association of individuals and companies, Donald G. Toelle and Jenkins Ranch, Inc., for themselves individually and for all other persons similarly situated Respondents-Cross-Appellants-Cross-Respondents, v. STATE of Oregon, acting By and Through the DIVISION OF STATE LANDS, Respondent-Cross-Appellant-Cross-Respondent and Michele McKay, for herself, and on behalf of her minor children, Erin and Allison McKay, Kristoen Winkle, for herself, and on behalf of her minor children, Regina, Justin and Garrison Winkle, Dee Stryker Coleman, for herself, and on behalf of her minor children, Sydney Meryl and Zane Stryker Coleman, Rest the West, an Oregon nonprofit corporation, Oregon Natural Desert Association, an Oregon nonprofit corporation, and Oregon Natural Resources Coalition, an Oregon nonprofit coalition, Appellants-Cross-Respondents.

94-04-10725-E; CA A87490.

Court of Appeals of Oregon.

Argued and Submitted Oct. 2, 1996.

Decided June 25, 1997.

James S. Coon, Portland, argued the cause for appellants-cross-respondents. With him on the briefs was Swanson, Thomas & Coon.

Daniel E. O'Leary, Portland, argued the cause for respondents-cross-appellants-cross-respondents. With him on the briefs were Timothy R. Volpert and Davis Wright Tremaine.

Rives Kistler, Assistant Attorney General, argued the cause for respondent-cross-appellant-cross-respondent State of Oregon. With him on the briefs were Theodore R. Kulongoski, Attorney General, and Virginia L. Linder, Solicitor General.

Lindsay J. Slater, Medford, filed a brief amicus curiae for Intervenor Oregon Cattlemen's Association.

Before RIGGS, P.J., and LANDAU and LEESON, JJ.

LANDAU, Judge.

Plaintiffs, a group of Eastern Oregon ranchers, initiated this action to force the Division of State Lands (DSL) to grant them 20-year grazing leases with automatic 20-year renewal options and to obtain reformation of those leases to insert a missing clause regarding their valuation. The trial court ordered DSL to grant the 20-year leases with the automatic lease renewals, but it declined to reform the leases to add the missing valuation clauses. We reverse the portion of the judgment ordering DSL to grant the longer lease terms and otherwise affirm.

We begin with the parties' arguments concerning the terms of the leases and the applicable extension periods, stating the facts necessary to the disposition of those arguments. Following that disposition, we address the parties' arguments concerning the claims for reformation, stating separately the facts relevant to those claims.

Regarding the first group of claims, the facts necessary to our decision are not in dispute. The State of Oregon has acquired, by a variety of means, approximately 500,000 acres of land east of the Cascade Mountains. The state received a substantial portion of the land when it was admitted into the Union in 1859. Under the terms of the Admission Act, the United States granted the state sections 16 and 36 of each township "for the use of schools." Admission Act, ch. 33, 11 Stat. 383 (1859). The State Land Board manages those lands, and, under Article VIII, section 5(2), of the Oregon Constitution, is charged with "obtaining the greatest benefit for the people of this state, consistent with the conservation of this resource under sound techniques of land management." DSL serves as the administrative agency through which the Land Board manages the "common school lands." The Land Board, through DSL, leased most of the common school lands in the area to private ranchers for grazing purposes. Apparently, there was no stated policy on the duration or renewal of the leases.

For many years, much of the common school lands lay in noncontiguous parcels, which made it difficult for the Land Board to manage effectively the land consistent with its constitutional obligations. In 1969, the Land Board and federal authorities began to exchange state and federal lands to consolidate the state's holdings into more manageable "blocks." The federal lands, however, also had been leased to private ranchers for grazing, and those leases were granted for periods of up to 10 years, subject to cancellation only on fairly narrow grounds. ¹ To facilitate the exchange of federally leased land for state lands, in 1979, the Land Board adopted a policy "to issue leases for its blocked lands for a term of ten years." The Land Board hoped that the assurance of a longer lease term would provide an incentive for ranchers to participate in the exchange.

Four years later, several ranchers requested that DSL recommend to the Land Board that it amend its policy to extend the lease terms to 20 years with an automatic 20-year right of renewal. DSL did so, and, in 1983, the Land Board approved a revision to the 1979 policy statement that "[g]razing leases shall be for 20 years instead of 10 years." The revision further provided that, as long as a lessee is not in default and is otherwise in compliance with all relevant lease conditions, the "lessee shall have the right to continue the lease for an additional term of 20 years." In the years following the adoption of the 1983 policy revisions, some lessees of blocked grazing land were offered 20-year leases with an automatic 20-year renewal period, but most were not. None of the lessees complained, however, and those offered shorter terms entered into the leases without objection. ²

In 1993, DSL recommended a new policy on grazing leases, which, among other things, would limit the term of a lease to 10 years. The Land Board approved the recommended changes, in concept, and DSL began work on implementing rules for approval by the Land Board. Meanwhile, as existing leases expired, DSL approved extensions of only a year or less, in anticipation of the adoption of a new policy.

Plaintiffs initiated this action on April 25, 1994. Plaintiffs alleged three claims for relief: (1) for a declaration under the Declaratory Judgment Act, ORS 28.010, that, among other things, the leases created in the land exchange process must conform to the 1983 revisions to the land exchange and grazing lease policy and provide for terms of 20 years, with automatic renewal periods of an additional 20 years; (2) for judicial review under ORS 183.484, relating to orders other than contested cases, requiring DSL to comply with the 1983 policy revisions; and (3) for judicial review under ORS 183.490, relating to agency failure to take action, requiring DSL to do the same. ³

DSL answered, asserting a number of affirmative defenses and a counterclaim. Pertinent to this appeal is DSL's affirmative defense that plaintiffs' claims are untimely. According to DSL, judicial review of agency orders must be obtained under the APA, not the Declaratory Judgment Act. As for the claim brought under ORS 183.490, DSL contended that the statute affords relief only in the face of agency inaction and does not apply when an agency takes action that is allegedly contrary to law. DSL contended that the sole remedy for judicial review of agency action lies under ORS 183.484(2), for which there is a limitation period of 60 days from the service of the agency order that is the subject of the petition for judicial review. DSL argued that, because the orders in this case--the leases executed by DSL and plaintiffs--had been served years before the filing of the complaint, the action is time barred. A number of intervenors, including Rest the West, Oregon Natural Desert Association, Oregon Natural Resources Council and several individuals, all of whom we refer to collectively as "Rest the West," asserted that plaintiffs' claims are time barred. They also argued that requiring DSL to grant the requested lease extensions would violate a number of constitutional and statutory provisions governing the management of common school lands. ⁴ Before trial, DSL moved to dismiss the declaratory judgment claim, arguing that the sole remedy for judicial review of agency action lies under the APA. The trial court denied the motion.

After trial, the court issued a 40-page opinion containing findings of fact and conclusions of law that, as relevant, included that the grazing leases were agency "orders" issued in other than a contested case within the meaning of ORS 183.484(2), that plaintiffs had failed to file their petition for judicial review of those orders within 60 days and that, accordingly, plaintiffs' petition for relief under ORS 183.484(2) is time barred. The trial court also concluded, however, that plaintiffs are free to seek the same relief under ORS 183.490. According to the trial court, that statute authorizes a court not merely to compel an agency to act, but also to compel an agency to act in accordance with a stated policy. The court held that, because plaintiffs complained of DSL's failure to act in accordance with the 1983 policy revisions, they were entitled to relief under ORS 183.490, and that, because actions brought under that statute are not subject to the statute of limitations that applies to actions brought under ORS 183.484(2), plaintiffs' action was not untimely. ⁵ The trial court then entered judgment for plaintiffs for declaratory and injunctive relief as requested in their complaint and awarded plaintiffs attorney fees.

On appeal, Rest the West contends that the trial court erred in concluding that ORS 183.490 affords plaintiffs any relief. In the alternative, Rest the West argues that, by requiring DSL to enter into 20-year grazing leases, the trial court effectively requires the agency to violate various statutory and constitutional provisions concerning the management of common school lands. Rest the West also argues that, even if the trial court correctly awarded plaintiffs the declaratory and injunctive relief that they requested, the court erred in...