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Waterkeeper v. Port of Coos Bay Oregon

Supreme Court of Oregon, En Banc

July 26, 2018

COOS WATERKEEPER, Former Petitioner,
v.
PORT OF COOS BAY OREGON and Department of State Lands, Respondents on Review. and SIERRA CLUB, Greenpeace, and Friends of Living Oregon Waters, Petitioners on Review,

          Argued and Submitted January 18, 2018

          On review from the Court of Appeals. (OAH 1202690) (CA A154347) [*]

          Jan E. Hasselman, Earthjustice, Seattle, Washington, argued the cause for petitioners on review. Karl G. Anuta, Portland, fled the briefs for petitioners on review. Also on the briefs were Jan E. Hasselman and Thomas M. Christ, Cosgrave Vergeer Kester LLP, Portland.

          Jona J. Maukonen, Assistant Attorney General, Salem, argued the cause and fled the brief for respondent on review Department of State Lands. Also on the brief were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.

          Steven L. Pfeiffer, Perkins Coie LLP, fled the brief for respondent on review Port of Coos Bay Oregon. Also on the brief were David A. Bledsoe and Kristina J. Holm.

          Tommy A. Brooks, Cable Huston LLP, Portland, fled the brief for amicus curiae Oregon Public Ports Association.

         [363 Or. 355] Angela M. Otto, Ball Janik LLP, Portland, fled the brief for amicus curiae Associate General Contractors - Oregon-Columbia Chapter.

         Case Summary:

         The Department of State Lands (DSL) issued a permit to respondents to remove material from Coos Bay as part of the construction of a deep water marine terminal. Petitioners challenged the issuance of the permit, arguing that it violated the governing statute, ORS 196.825, because DSL did not consider certain negative effects of the operation of the proposed terminal. An administrative law judge held a contested case hearing and upheld the issuance of the permit, and the Department of State Lands reviewed the administrative law judge's proposed order and issued a final order upholding the permit. Petitioner sought judicial review at the Court of Appeals, which affirmed. Held: ORS 196.825 did not require DSL to consider certain effects of the operation of the terminal, and DSL properly issued the permit.

         The decision of the Court of Appeals and the order of the Department of State Lands are affirmed.

         [363 Or. 356] BALMER, J.

         In this case, we review a final order of the Department of State Lands (DSL) that granted a permit to the Port of Coos Bay (Port) in connection with the construction of a deep water marine terminal in Coos Bay. The permit allows the Port to dredge 1.75 million cubic yards of material from the bay, while also imposing a number of conditions to address environmental concerns. Petitioners are environmental advocacy groups who argue that the Port's application did not meet the requirements for issuing a permit set out in ORS 196.825. An administrative law judge (ALJ) held a contested case hearing and rejected petitioners' arguments. DSL reviewed the conclusions of the ALJ and issued a final order affirming the permit. The Court of Appeals affirmed DSL's final order. Coos Waterkeeper v. Port of Coos Bay, 284 Or.App. 620, 395 P.3d 14 (2017). Petitioners contend that DSL erred in failing to consider evidence of certain negative effects of the construction and operation of the terminal in the permit application review process. On review, we hold that DSL properly considered the criteria set out in ORS 196.825 and did not err in granting the permit. We therefore affirm.

         I. FACTS AND PROCEEDINGS BELOW

         In 2007, the Port submitted an initial application to DSL proposing to construct a new multi-berth, multi-user marine terminal in Coos Bay. Over the next few years, the department requested more information on various aspects of the project, and the Port responded with additional plans and studies refining and supporting its chosen site and design, the public need for the terminal, the placement of removed material, the effects on aquatic life, and other aspects of the development.

         Ultimately, the finalized plan called for construction to occur in two phases. The "freshwater phase" would involve excavating a slip and constructing facilities to accommodate vessels and cargo. That excavation would occur in an upland area, separated from the bay by an existing earthen berm. After the slip's completion, the berm would be removed and the slip would become part of the bay. Because the excavation and construction of the freshwater phase would not [363 Or. 357] occur in wetlands or waters of the state, the Port did not seek, and DSL did not issue, a removal fill permit for that work. The "saltwater phase," in contrast, would consist of removing the berm, dredging an access channel from the slip to the existing navigation channel in the bay, and performing a small amount of in-water construction necessary to complete the cargo wharf. Dredging the access channel would submerge approximately 13 acres of intertidal area and remove 1.75 million cubic yards of material. For those activities, the Port sought a removal fill permit.

         The department considered the permit application under Oregon's removal fill law, ORS 196.800 - 196.990, and the department's rules implementing that statute, OAR chapter 141, division 85. In findings that accompanied the permit, the department noted that its authority is limited to the removal from and fill of waters of the state and that it "has no authority to determine whether a particular project (other than the portion that involves removal/fill within waters of the state) is good for the State of Oregon." The permit explained that the Port had considered eight alternative sites and designs for the project, and that the preferred alternative had the least impact on water resources. The permit also required the Port to mitigate the effects on wetlands through the creation, restoration, and enhancement of over 40 acres of wetlands, under Oregon's Removal-Fill Mitigation Fund Act.

         The findings accompanying the permit also discussed the use of the terminal, explaining that the Port had a preliminary commitment from the Jordan Cove Energy Project to use one of the two cargo berths for importing or exporting liquefied natural gas (LNG) and also had received expressions of interest from other potential users of the facility. It noted that, in issuing the permit, "the Department is not making a finding regarding need for or public benefit from a terminal facility that would import or export LNG." It also observed, however, that the legislature has designated the development of deepwater port facilities at Coos Bay as a "state economic goal of high priority." ORS 777.065.

         Petitioners appealed the permit, and in 2012 an administrative law judge held a hearing. The parties filed [363 Or. 358] cross-motions for summary determination, and the ALJ issued a proposed order upholding the permit. Petitioners then appealed that proposed order to the department. The department issued a final order that adopted in full the findings of fact and conclusions of law of the proposed order.

         Petitioners appealed to the Court of Appeals and made two arguments. First, petitioners asserted that the "freshwater phase" required a removal fill permit, and the department's decision otherwise was error. The Court of Appeals rejected that argument, holding that DSL "lacked authority to regulate the freshwater phase of the project." Coos Waterkeeper, 284 Or.App. at 640. Petitioners do not renew that argument here. Second, they asserted that the department should have considered the effects of the operation of the terminal when deciding whether to issue the permit. The court also rejected that argument, explaining that the statute does not require DSL to consider the "effects of post-construction operation of the development." Id. at 636. Petitioners sought review, and we allowed the petition.

         In this court, petitioners argue that DSL erred in its interpretation of the removal fill statute and improperly limited which effects of the terminal it considered when it granted the permit. Petitioners contend that those errors arise from DSLs incorrect interpretation of the statutory term "project" in ORS 196.825(1). Petitioners urge an understanding of "project" that encompasses the effects of the operation of the terminal, whereas the Port and DSL (respondents) argue that the legislature intended the word to be more limited in scope. Before examining those positions further, we turn to the statute at issue.

         II. STATUTORY FRAMEWORK

         DSL has authority to issue permits to persons seeking "to remove material from the beds or banks or fill any waters of this state." ORS 196.815.[1] ORS 196.825 sets out the procedures for applying for a permit and the department's [363 Or. 359] processing of applications. Subsection (1) of that statute contains a general standard, using the disputed word "project," that must be satisfied for DSL to issue a permit:

"(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."

(Emphasis added.) Subsection (2) then lists nine criteria that DSL must consider in determining whether to issue a permit. All of those criteria refer to "fill or removal" and only one refers to the "project":

"(2) In determining whether to issue a permit, the director shall consider all of ...

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