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Oregon Supreme Court Affirms Remand of Wetlands Fill Permit to Oregon Department of State Lands Based on Statutory Mandate Regarding Public Need for the Water

Oregon Supreme Court Affirms Remand of Wetlands Fill Permit to Oregon Department of State Lands Based on Statutory Mandate Regarding Public Need for the Water

By Alex Shasteen

In Citizens for Responsible Development in The Dalles v. Wal-Mart Stores, Inc., the issue of whether a wetlands fill permit issued by a state agency required remand back to the agency for further consideration. The Court of Appeals found that remand was appropriate based on case precedent. The Supreme Court of Oregon agreed on remand, but found that it was appropriate based on that recent legislative mandate was the justification. [Citizens for Responsible Development in The Dalles v. Wal-Mart Stores, Inc., 366 Or. 272, 274, (Or. 2020).]

Background

The Citizens for Responsible Development in The Dalles case arises from Walmart’s proposed construction of a store on a 66-acre site in The Dalles. The construction requires a removal-fill permit from the Oregon Department of State Lands (DSL or the Department) because the site includes approximately two acres of wetlands. After DSL granted Walmart the permit, a citizen group protested it and litigation ensued. The Oregon Supreme Court examined case precedent and legislative mandate to answer the inquiry if remand by the DSL was an appropriate remedy. The Court of Appeals had thought case precedent was the key to remand while the Supreme Court found the legislative mandate the key to remand.

In 2018, the Oregon Court of Appeals reversed and remanded DSL’s decision to issue Walmart’s removal-fill permit. See, Citizens for Responsible Development in The Dalles v. Wal-Mart Stores, Inc., 295 Or. App. 310 (2018). The Oregon Supreme Court recently affirmed the Court of Appeals’ decision. However, the Supreme Court analyzed the relevant caselaw differently, taking the opportunity to clarify its ruling in Morse v. Oregon Division of State Lands, 285 Or. 197 (1979) in light of subsequent legislative amendments to the removal-fill statute.

Oregon’s Removal-Fill Statute

The case turns on the interpretation of ORS § 196.825, which sets out the criteria under which the Department issues a removal-fill permit. It provides in part:

“(1) The Director of the Department of State Lands shall issue a permit applied for under ORS 196.815 if the director determines that the project described in the application:

(a) Is consistent with the protection, conservation and best use of the water resources of this state as specified in ORS 196.600 to 196.905; and

(b) Would not unreasonably interfere with the paramount policy of this state to preserve the use of its waters for navigation, fishing and public recreation. . . .

(3) In determining whether to issue a permit, the director shall consider all of the following:

(a) The public need for the proposed fill or removal and the social, economic or other public benefits likely to result from the proposed fill or removal. When the applicant for a permit is a public body, the director may accept and rely upon the public body’s findings as to local public need and local public benefit.”

Procedural Posture

DSL issued Walmart a removal-fill permit with required mitigation. DSL’s findings included that:

“. . .the record is inconclusive with regard to whether the project, for which the fill or removal is proposed, will address a public need. . .[and]. . .[l]ikewise, the record is inconclusive regarding the social, economic or other public benefits that may result from the proposed project.”

Citizens for Responsible Development in The Dalles protested the permit and requested a contested case hearing. Citizens for Responsible Development argued DSL had no authority to issue the permit because the record was inconclusive as to whether the proposed project addressed a public need. The Administrative Law Judge issued a proposed order granting the permit, and the Department issued the final order granting it.

Citizens for Responsible Development appealed, and the Court of Appeals reversed and remanded. The Court of Appeals relied on Morse, which interpreted a prior version of the removal-fill statute, in holding that that ORS § 196.825 requires DSL to find a public need for a proposed project in order to grant a removal-fill permit.

The Supreme Court granted DSL’s petition for review.

The Supreme Court’s Decision

The Supreme Court:

“. . .agree[d] with the Court of Appeals that the current fill statute incorporates Morse’s core conclusion: DSL’s statutory obligation to determine whether a proposed project ‘unreasonably interferes’ with the state’s ‘paramount policy’ requires it to weigh any interference against—the now-expanded categories of—public benefit.”

However, the Supreme Court concluded that “the Court of Appeals overstate[d] the holding of Morse and understate[d] the significance of subsequent legislative amendments.”

The Court of Appeals’ decision suggested “that ORS 196.825 conditions the issuance of every [removal-fill] permit on a finding that the proposed project will serve a ‘public need.’” (Emphasis added). On the contrary, the Supreme Court found that:

“. . .[the] Morse[decision] required DSL to determine and weigh the ‘public need’ for a fill project only if the proposed fill would ‘interfere with’ the state’s ‘paramount policy’ of preserving its waters for the specified public purposes.” (Emphasis added).

The Supreme Court agreed with the Court of Appeals’ decision to reverse and remand to DSL, explaining that:

“. . .[b]ecause DSL found that all categories of public benefit from the project were ‘inconclusive’ but failed to find that the project would not ‘interfere’ with the state’s ‘paramount policy,’ the record does not support its determination that the project will not ‘unreasonably interfere.’”

Conclusion and Implications

Sometimes, getting the correct remedy in a case isn’t the end of the story. This case presented a useful opportunity for the Oregon Supreme Court to clarify its 40-year-old Morse analysis in light of subsequent statutory changes. Legislative history aficionados may find the Supreme Court’s thorough opinion worth a read.