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

434 P.3d 461, 295 Or. App. 395
CourtCourt of Appeals of Oregon
DecidedDecember 12, 2018
DocketA161527
StatusPublished
Cited by3 cases

This text of 434 P.3d 461 (Kinzua Res., LLC v. Or. Dep't of Envtl. Quality) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kinzua Res., LLC v. Or. Dep't of Envtl. Quality, 434 P.3d 461, 295 Or. App. 395 (Or. Ct. App. 2018).

Opinion

DEHOOG, P. J., *462*397Petitioners 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 *398of 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 waste and related debris at the landfill from the onsite activities of the adjacent sawmill.

Among other things, Kinzua's permit required the permit holder to maintain continuous financial assurance for the costs of closing down the landfill and post-closure maintenance and related activities. See ORS 459.205 ; ORS 459.268 ; OAR 340-095-0090. In October 2006, Kinzua provided DEQ with a financial assurance plan that estimated certain per-acre closure and post-closure costs. DEQ found the estimated per-acre costs to be reasonable but determined that the plan failed to account for the total acreage of the landfill. Using Kinzua's plan, DEQ recalculated the estimated costs and determined that the total costs associated with closure and post-closure activities would be $1,445,040.

In December 2009, LeeLyn and Wiley Mt. quitclaimed the landfill site back to Kinzua as part of a larger plan to sell the sawmill to Boise-Cascade. Following its acquisition of the sawmill, Boise-Cascade delivered 40,000 cubic yards of wood waste to Kinzua's landfill. Since that delivery in September 2010, Kinzua has not accepted any waste at the landfill. As of the hearing date in late 2014, however, Kinzua had not closed the landfill.2

*463*399In summer 2010 and again in summer 2011, one or more surface fires erupted at the landfill. In 2010, Demers and other members and shareholders of Frontier and ATR agreed that Demers would respond to DEQ's inquiries regarding issues related to the landfill site. From that time on, DEQ exclusively communicated with Demers regarding such issues, including fire-control efforts at the site and the financial assurance requirements of the permit.

On July 17, 2010, DEQ issued a Notice of Civil Penalty Assessment and Order alleging that Kinzua had violated certain administrative rules and the requirements of its permit by failing to maintain financial assurance in an amount sufficient to cover the costs of closure and post-closure maintenance. Following a default by Kinzua, DEQ issued a final order in March 2011, in which it found that Kinzua had failed to maintain the required financial assurance and assessed a civil penalty against Kinzua in the amount of $25,075. The order also directed Kinzua to secure the financial assurance required by its permit. Kinzua has not complied with that order.

In August 2013, DEQ issued the amended notice at issue in this case, once again naming Kinzua as a responsible party, but also naming others, including Demers, Frontier, and ATR as persons "owning or controlling" the land disposal site. In its amended notice, DEQ proposed civil penalties totaling $790,062 against each of those parties, jointly and severally, in connection with Kinzua's landfill site. DEQ alleged, among other things, that, between July 1, 2011 and August 23, 2013, petitioners had failed to notify DEQ of a surface fire at the site, failed to close the disposal site after it stopped accepting waste, and failed to maintain financial assurance.

In addition to adopting the foregoing factual findings as its own, the commission found-contrary to the ALJ's findings-that Demers had exercised control over the landfill site. To support that finding of control, the commission made additional findings of fact.

The commission found, based on email communications between DEQ and Demers in 2010 and 2014, that Demers had provided for fire control measures at the landfill *400in response to DEQ's requests, that he had been working with a consultant in an effort to resolve problems arising at the landfill, and that he had identified himself as a member of Kinzua.

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Related

Kinzua Resources v. DEQ
523 P.3d 120 (Court of Appeals of Oregon, 2022)
Kinzua Resources v. DEQ
468 P.3d 410 (Oregon Supreme Court, 2020)
Kinzua Res., LLC v. Or. Dep't of Envtl. Quality
437 P.3d 331 (Court of Appeals of Oregon, 2019)

Cite This Page — Counsel Stack

Bluebook (online)
434 P.3d 461, 295 Or. App. 395, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kinzua-res-llc-v-or-dept-of-envtl-quality-orctapp-2018.