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Kinzua Resources, LLC v. Oregon Department of Environmental Quality

Court of Appeals of Oregon

December 12, 2018

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, Petitioners,
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, Respondents.

          Argued and submitted August 8, 2017

          Environmental Quality Commission LQSWER11108

          Julie A. Weis argued the cause for petitioners. Also on the opening brief were Michael E. Haglund and Sara Ghafouri. Also on the reply brief was Michael E. Haglund.

          Denise G. Fjordbeck, Assistant Attorney General, argued the cause for respondents. Also on the brief were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.

          Before DeHoog, Presiding Judge, and Egan, Chief Judge, and Aoyagi, Judge.

         Case Summary:

         Petitioners seek judicial review of a final order of the Environmental Quality Commission relating to property owned and previously operated as a landfill by petitioner Kinzua Resources, LLC. Petitioners contend that the commission lacked authority to impose fines against petitioner Demers, an individual who met and corresponded with the Department of Environmental Quality regarding Kinzua's land disposal site, or against petitioners ATR Services, Inc., and Frontier Resources, LLC, two entity members of Kinzua. The [295 Or.App. 396] commission fined each of those parties on the theory that they were persons "controlling" a landfill site within the meaning of ORS 459.205 and ORS 459.268 and were, therefore, required to comply with the applicable landfill permit and OAR 340-095-0090.

         Held:

         In light of the text, context, and legislative history of ORS 459.205 and ORS 459.268, the statutory term "controlling" 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. Because the commission's decision relied on an erroneous interpretation of those provisions of law, the Court of Appeals reversed and remanded the final order.

         Reversed and remanded.

         [295 Or.App. 397] DEHOOG, P. J.

         Petitioners seek judicial review of a final order of the Environmental Quality Commission relating to property owned and previously operated as a landfill by petitioner, Kinzua Resources, LLC (Kinzua). Petitioners contend that the commission lacked authority to impose fines against petitioner Demers, an individual who met and corresponded with the Department of Environmental Quality (DEQ) regarding Kinzua's land disposal site, or against petitioners ATR Services, Inc. (ATR), and Frontier Resources, LLC (Frontier), two entity members of Kinzua. Acting under ORS 459.205 and ORS 459.268, the commission fined each of those parties on the theory that they were persons "controlling" a landfill site within the meaning of those statutes and were, therefore, required to comply with the applicable landfill permit and OAR 340-095-0090. In light of the text, context, and legislative history of ORS 459.205 and ORS 459.268, we conclude that the statutory term "controlling" 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.[1] Because the commission's decision relied on an erroneous interpretation of those provisions of law, we reverse and remand the final order.

         We begin by reciting the relevant aspects of the administrative law judge's (ALJ) findings of fact, most of which were adopted by the commission and are not challenged on appeal.

         Kinzua is a limited liability company registered in Oregon. Kinzua has only two members, Frontier and ATR, both of which are entities registered to conduct business in Oregon. Demers is a member of Frontier, as well as a shareholder in, and the president of, ATR. Demers is neither the sole member of Frontier nor the sole shareholder of ATR.

         In 1996, Kinzua acquired a sawmill and wood waste landfill located on adjacent parcels in Pilot Rock, Oregon. Kinzua also acquired approximately 300, 000 acres [295 Or.App. 398] of timberland. Kinzua operated the sawmill and landfill until at least 2010. The landfill's sole purpose was to accept wood waste from the adjacent sawmill. Kinzua sold the marketable timberland in 1998 but retained ownership of the sawmill and landfill until February 2006, when Kinzua sold the properties on which those facilities were located to LeeLyn, Inc. and Wiley Mt., Inc. For some time after that sale, Kinzua continued to operate the sawmill and landfill.

         In late February 2005, Kinzua applied for a renewal of its solid waste permit, and, in May 2006, DEQ issued a solid waste disposal site permit identifying Kinzua as the permittee, property owner, and facility operator. The permit, which expired on February 28, 2016, authorized Kinzua to accept wood ...


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