Citizens for Resp. Devel. in The Dalles v. Walmart

272

Argued and submitted November 14, 2019; decision of Court of Appeals

affirmed, final order of the Department of State Lands reversed, and case

remanded to Department of State Lands for further proceedings April 16, 2020

CITIZENS FOR RESPONSIBLE

DEVELOPMENT IN THE DALLES,

Respondent on Review,

v.

WAL-MART STORES, INC.,

Respondent,

and

DEPARTMENT OF STATE LANDS,

Petitioner on Review.

(DSL APP0043798RF) (CA A158346) (SC S066596)

461 P3d 956

The Department of State Lands (DSL), issued a permit, pursuant to ORS

196.825, to Wal-Mart Stores, Inc., to fill and remove wetlands on private prop-

erty in order to build a new store. Citizens for Responsible Development in The

Dalles (Citizens) opposed the project and argued on appeal that DSL erred when

it issued the permit because it did not find that there was a “public need” for

the project. The Court of Appeals agreed with Citizens and remanded the case

to DSL. Held: The Court of Appeals erred to the extent that it held that ORS

196.825 requires a finding that a “public need” for the fill or removal project

“predominates” over the loss to the waters of the state caused by the project for

every approved permit. Rather, ORS 196.825 “requires that, if DSL finds that the

proposed fill will ‘interfere with the paramount policy of this state to preserve

the use of its waters for navigation, fishing and public recreation,’ then DSL must

determine whether the interference is ‘unreasonable’ by weighing the interfer-

ence with public uses for which ‘waters of this state’ are preserved against” a “list

of public-benefit considerations” found in ORS 196.825(3). Under that standard,

DSL failed to make a finding necessary to support its ultimate determination

that the project will not “unreasonably interfere.”

The decision of the Court of Appeals is affirmed. The final order of the

Department of State Lands is reversed, and the case is remanded to the

Department of State Lands for further proceedings.

En Banc

On review from the Court of Appeals.*

______________

* On judicial review from the Department of State Lands. 295 Or App 310,

433 P3d 364 (2018).

Cite as 366 Or 272 (2020) 273

Inge D. Wells, Assistant Attorney General, Salem, argued

the cause and filed the briefs for petitioner on review. Also

on the briefs were Ellen Rosenblum, Attorney General, and

Benjamin Gutman, Solicitor General.

Karl G. Anuta, Law Office of Karl G. Anuta PC, Portland,

argued the cause and filed the brief for respondent on review.

Also on the briefs was Cary Allen, Portland.

FLYNN, J.

The decision of the Court of Appeals is affirmed. The

final order of the Department of State Lands is reversed,

and the case is remanded to the Department of State Lands

for further proceedings.

274 Citizens for Resp. Devel. in The Dalles v. Walmart

FLYNN, J.

The Department of State Lands (DSL) issued a

permit, pursuant to ORS 196.825, for Wal-Mart Stores,

Inc. (“Walmart”) to fill and remove some wetlands on pri-

vate property in order to build a new store in The Dalles.

Citizens for Responsible Development in The Dalles

(Citizens) opposed the project and appealed the fill per-

mit, arguing that DSL lacked authority to issue the permit

because DSL did not find that there was a “public need” for

the project. The Court of Appeals agreed with Citizens that

DSL erred in issuing the permit “[b]ecause DSL found that

it was inconclusive whether the project would address a pub-

lic need.” Citizens for Resp. Devel. in The Dalles v. Walmart,

295 Or App 310, 321, 433 P3d 364 (2018). We allowed DSL’s

petition for review and now affirm the decision of the Court

of Appeals to remand the case to DSL, although we disagree

with its premise that ORS 196.825 conditions the issuance

of every permit on a finding that the proposed project will

serve a “public need.”

The case requires us to construe ORS 196.825, which

specifies that, before DSL issues a permit to fill any “waters

of this state”—a term that includes “wetlands”—DSL must

determine that the project “[w]ould not unreasonably inter-

fere with the paramount policy of this state to preserve the

use of its waters for navigation, fishing and public recre-

ation.”1 ORS 196.800(15); ORS 196.815; ORS 196.825(1). The

case also requires us to examine and explain the scope of

our holding in Morse v. Oregon Division of State Lands, 285

Or 197, 204, 590 P2d 709 (1979), which construed a similar

requirement in the 1977 fill-permit statute as meaning that

DSL must identify and “weigh the extent of the public need

for the fill as compared with the public interest in the pres-

ervation of the water” for the specified public uses.

According to the Court of Appeals, “Morse con-

clude[d] that DSL lacks the authority to issue a permit

without a finding that a public need predominates,” and

the current fill statute retains that requirement. 295 Or

1

The same statutory requirements govern DSL permits to “remove material

from the bed or banks” of “waters of this state,” but the permit at issue here was

for “fill.” ORS 196.815(1); ORS 196.825(1).

Cite as 366 Or 272 (2020) 275

App at 319. But DSL contends that Morse’s construction of

the fill-permit statute did not extend to permits to fill wet-

lands on private property and that, as amended following

Morse, the statute now requires DSL only to “reflect on” or

“give thought to” the “public need” for a project. According

to DSL, it satisfied that requirement by considering—and

finding “inconclusive”—whether there is a “public need” for

the project.

We agree with DSL in part. The reasoning of the

Court of Appeals overstates the holding of Morse and under-

states the significance of subsequent legislative amend-

ments. On the other hand, the argument advanced by DSL

understates the holding of Morse and overstates the signif-

icance of the subsequent legislative amendments. Properly

understood, Morse 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 preserv-

ing its waters for the specified public purposes. Moreover,

the legislature has since expanded the categories of public

benefit that DSL must consider, so that its finding that the

“public need” for Walmart’s project is “inconclusive” does not

necessarily require DSL to deny the permit. However, we

agree with the Court of Appeals that the current fill statute

incorporates Morse’s core conclusion: DSL’s statutory obliga-

tion to determine whether a proposed project “unreasonably

interferes” with the state’s “paramount policy” requires it to

weigh any interference against—the now-expanded catego-

ries of—public benefit. We also conclude that the legislature

has required DSL to conduct that weighing for all “waters of

the state,” a category that now includes wetlands on private

property. Because 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 “para-

mount policy,” the record does not support its determination

that the project will not “unreasonably interfere.”

I. DISCUSSION

A. Statutory Framework

Before turning to DSL’s grant of the permit in this

case, we resolve the parties’ dispute regarding the statu-

tory framework that governs DSL’s authority to grant fill or

276 Citizens for Resp. Devel. in The Dalles v. Walmart

removal permits. The legislature has codified as state policy

that

“[t]he protection, conservation and best use of the water

resources of this state are matters of the utmost public con-

cern. Streams, lakes, bays, estuaries and other bodies of

water in this state, including not only water and materials

for domestic, agricultural and industrial use but also hab-

itats and spawning areas for fish, avenues for transporta-

tion and sites for commerce and public recreation, are vital

to the economy and well-being of this state and its people.”

ORS 196.805(1). In furtherance of that policy, the legisla-

ture assigned to DSL authority over “the removal of mate-

rial from the beds and banks or filling of the waters of this

state.” Id. The term “waters of this state” encompasses all

“navigable and nonnavigable bodies of water in this state,”

and it specifically includes “wetlands.” ORS 196.800(15).

DSL is authorized to issue a permit for the fill of or

removal from “waters of this state” if it “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 * * *; and

“(b) Would not unreasonably interfere with the para-

mount policy of this state to preserve the use of its waters

for navigation, fishing and public recreation.”

ORS 196.825(1). In addition, the statute lists specific factors

that DSL “shall consider” “[i]n determining whether to issue

a permit,” including as pertinent:

“(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[;] * * * [and]

“(b) The economic cost to the public if the proposed fill

or removal is not accomplished.”

ORS 196.825(3).2

2

The other factors that the statute directs DSL to “consider” are:

“(c) The availability of alternatives to the project for which the fill or

removal is proposed.

“(d) The availability of alternative sites for the proposed fill or removal.

“(e) Whether the proposed fill or removal conforms to sound policies of

conservation and would not interfere with public health and safety.

Cite as 366 Or 272 (2020) 277

The dispute in this case turns on what the legisla-

ture intended to require by the directive that DSL “deter-

mine[ ]” that the proposed project “[w]ould not unreasonably

interfere with the paramount policy of this state” by “consid-

er[ing] * * * [t]he public need for the proposed fill or removal.”

ORS 196.825(1), (3). We have frequently reiterated that a

court’s “paramount goal” in construing a statute is to dis-

cern the intention of the legislature. State v. Gaines, 346 Or

160, 171, 206 P3d 1042 (2009); ORS 174.020(1)(a). In pursu-

ing that goal, we give primary weight to the text and con-

text of the disputed statutory terms. Id. Our understanding

of the intended meaning of a statute “is also informed by

this court’s prior construction of that statute or its predeces-

sors.” State v. Cloutier, 351 Or 68, 100, 261 P3d 1234 (2011)

(citation omitted); see also Blacknall v. Board of Parole, 348

Or 131, 142, 229 P3d 595 (2010) (prior cases supply context

and “may illuminate or explain the meaning of the statu-

tory text”).

We begin our statutory analysis with this court’s

decision in Morse, which construed the “not unreasonably

interfere” requirement that the current statute retains.

At the time of our decision in Morse, the requirements for

DSL to issue a permit to fill or to remove material from the

“waters of this state” were set out in former ORS 541.625(2)

(1977), which provided, in pertinent part, that

“[t]he Director of the Division of State Lands may issue a

permit applied for under ORS 541.620 for filling waters of

“(f) Whether the proposed fill or removal is in conformance with existing

public uses of the waters and with uses designated for adjacent land in an

acknowledged comprehensive plan and land use regulations.

“(g) Whether the proposed fill or removal is compatible with the acknowl-

edged comprehensive plan and land use regulations for the area where the

proposed fill or removal is to take place or can be conditioned on a future local

approval to meet this criterion.

“(h) Whether the proposed fill or removal is for streambank protection.

“(i) Whether the applicant has provided all practicable mitigation to

reduce the adverse effects of the proposed fill or removal in the manner set

forth in ORS 196.800. In determining whether the applicant has provided

all practicable mitigation, the director shall consider the findings regard-

ing wetlands set forth in ORS 196.668 and whether the proposed mitigation

advances the policy objectives for the protection of wetlands set forth in ORS

196.672.”

ORS 196.825(3).

278 Citizens for Resp. Devel. in The Dalles v. Walmart

this state. In determining whether or not a permit shall be

issued, the director shall consider the following:

“(a) Whether the proposed fill unreasonably interferes

with the paramount policy of this state to preserve the use of

its waters for navigation, fishing and public recreation[.]”3

Former ORS 541.625(2) (1977) (emphases added).4

The dispute in Morse arose out of a permit that DSL

had issued to the City of North Bend to fill 32 acres of a

Coos Bay estuary to make possible an extended runway for

the city’s municipal airport. In approving the permit appli-

cation in Morse, DSL had found that the fill would displace

clams and other organisms and “would eliminate some

casual navigation of the recreational kind.” 285 Or at 200.

DSL had approved the permit but had required the city to

take certain actions to mitigate those harms. The petitioner

challenged the permit on appeal, and this court ultimately

allowed review. The statutory dispute in Morse focused

on the meaning of the requirement that “[i]n determining

whether or not a permit shall be issued, the director shall

consider * * * [w]hether the proposed fill unreasonably inter-

feres with the paramount policy of this state to preserve the

use of its waters for navigation, fishing and public recre-

ation[.]” Former ORS 541.625(2)(a) (1977). This court con-

strued that statutory requirement and ultimately concluded

that DSL lacked statutory authority to issue the particular

permit because DSL “failed to make any ultimate finding

of fact that the public need for the airport extension out-

weighed the detriment to” the water-related uses specified

in the statute. 285 Or at 209. That ultimate holding led the

Court of Appeals to characterize Morse as concluding “that

DSL lacks the authority to issue a permit without a finding

that a public need predominates.” 295 Or App at 319.

We agree with DSL, however, that the Court of

Appeals overstated the holding of Morse. Properly under-

stood, our decision in Morse is divided into two distinct

sections: analysis and conclusions about the meaning of

3

The 1977 statute separately listed requirements for issuing permits “to

remove material from the beds or banks of any waters of this state” in former

ORS 541.625(1) (1977).

4

Former ORS 541.625 (1977) was renumbered to ORS 196.825 in 1989.

Cite as 366 Or 272 (2020) 279

the statute, followed by an application of the statute to

conclude that DSL lacked authority to issue the particular

permit at issue in Morse. Morse first engaged in an exer-

cise of statutory construction to determine what the leg-

islature intended by the requirement that DSL consider

“[w]hether the proposed fill unreasonably interferes with

the paramount policy of this state.” 285 Or at 205 (empha-

sis omitted). Preliminarily, the opinion concluded that the

legislature intended the “unreasonably interferes” standard

to govern all categories of fills in waters of the state, includ-

ing fills for purposes that were not water-related—like the

airport extension. Id. The opinion then held that the legis-

lature intended DSL to determine whether “interference” is

“unreasonable” by “weighing the extent of the public need

for the fill against the interference with the [‘paramount

policy of this state to preserve the use of its waters for the’]

named water-related uses.” Id. The opinion explained that

“[w]hether or not the interference with water-related uses is

unreasonable necessarily depends upon the extent of public

need for the use which so interferes.” Id. As that discussion

makes clear, Morse identified DSL’s obligation to identify

and weigh “the extent of the public need” as the way that

DSL must evaluate fill proposals that would “interfere” with

the specified state water policy. Id.

Morse then turned briefly to an assessment of the

particular permit at issue in the case. As the opinion recited,

DSL had found that the particular estuary fill would “dis-

place clams as well as other organisms” and “would eliminate

some casual navigation of the recreational kind.” Id. at 200.

In other words, DSL had already determined that the pro-

posed fill of the estuary would cause “interference” with the

state’s water-related concerns. See Coos Waterkeeper v. Port

of Coos Bay, 363 Or 354, 370, 423 P3d 60 (2018) (explaining

that, “[i]n Morse, the purpose of the fill permit was to extend

an airport runway into the bay, thus necessarily reducing

the extent of state waters and interfering with navigation,

fishing, and recreational uses in order to further an entirely

nonwater related use”).5 In the context of that particular

5

In Coos Waterkeeper, this court construed the meaning of the term “project,”

as used in ORS 196.825, and concluded “that the legislature intended ‘project’ to

include fill or removal and construction, but not operations” of the constructed

280 Citizens for Resp. Devel. in The Dalles v. Walmart

fill, the opinion concludes that, “[i]n the absence of a find-

ing that the public need predominates, there is no basis

for the issuance of the permit[.]” 285 Or at 209 (emphasis

added).

It was only in the course of the permit-specific

assessment that Morse referred to a finding of “public need”

as necessary, and that holding must be understood in the

context of a particular proposed fill that would interfere to

some extent with waters of the state. Thus, we agree with

DSL that Morse did not construe the legislature’s phrase

“unreasonably interferes” as requiring a finding in every

case “that a public need predominates.” Rather, Morse con-

strued the statute to require that, if the proposed fill “inter-

feres with the paramount policy of this state” within the

meaning of the statute, then DSL must engage in a weigh-

ing of “the extent of the public need for the fill” to determine

whether the interference would be “unreasonable.” 285 Or

at 205.

However, we agree with the basic premise of the

Court of Appeals that, when Morse construed DSL’s statu-

tory obligation to consider whether a proposed fill “unrea-

sonably interferes,” it did so for purposes of all fill permits

under former ORS 541.625(2) (1977). As explained above,

Morse’s holding that the legislature intended DSL to deter-

mine whether “interference” is “unreasonable” by engaging

in a “weighing” was part of the court’s analysis of the stat-

ute, generally, before the opinion turned to a discussion of

the particular permit at issue in the case. 285 Or at 205.

Morse’s conclusion regarding the meaning of the statutory

requirement applied—and continues to apply—to all per-

mits for “filling waters of this state.” Former ORS 541.625(2)

(1977). Then—as now—“waters of this state” encompassed

both “navigable and nonnavigable” bodies of water in this

state. Former ORS 541.605(8) (1977). We, thus, reject DSL’s

facility. 363 Or at 364. In the course of reaching that conclusion, we rejected the

petitioner’s reliance on Morse for a very different proposition than that at issue

here—an argument that Morse requires “scrutiny of ‘the need for, and impacts

of, the underlying project as a whole.’ ” Id. at 369. We made the statement that the

statutory amendments after Morse “undercut petitioners’ argument.” Id. at 370.

Although DSL reads that comment as a broad conclusion that Morse was “under-

cut” by the subsequent amendments, that was not the point of our comment.

Cite as 366 Or 272 (2020) 281

proposal that Morse’s construction of what it means for

“interference” to be “unreasonable” addressed only permits

for fills in the kind of tidal, navigable water that was at

issue in Morse.

Our construction of the statute in Morse signifi-

cantly informs our understanding of the statutory amend-

ments that followed. Immediately after we issued our deci-

sion in Morse, the 1979 legislature began considering, and

ultimately approved, a bill to amend the fill-permit statute.

That new legislation, House Bill (HB) 2619 (1979), changed

the permit statute in three ways that are significant to the

dispute in this case, and those changes suggest—as the

Court of Appeals reasoned—that the amendments primar-

ily were “intended to codify Morse’s construction of the stat-

ute[.]”6 Citizens, 295 Or App at 317.

First, the 1979 legislature converted the 1977

instruction that DSL “consider * * * [w]hether the proposed

fill unreasonably interferes with the paramount policy of

this state to preserve the use of its waters for navigation,

fishing and public recreation” to a requirement that DSL

“shall” issue a permit if the director “determines that the

proposed fills would not unreasonably interfere with the

paramount policy of this state to preserve the use of its

waters for navigation, fishing and recreation.” Or Laws

1979, ch 564, § 3a. That change modifies the statutory struc-

ture in a way that appears to more closely capture Morse’s

conclusion that the legislature has authorized DSL to issue

permits for some fills that will interfere with the preserva-

tion of the state’s waters as long as DSL determines that the

fill will not “unreasonably interfere” with the state’s para-

mount purpose.

Second, the 1979 legislature added two new factors

that “the director shall consider” in determining whether

to issue a permit: “(a) The public need for the proposed fill

and the social, economic or other public benefits likely to

6

The 1979 legislature made other changes to former ORS 541.625 that are

not pertinent to our inquiry in this case, including an entirely new section direct-

ing DSL to “require mitigation as a condition of any permit for filling or removal

of material from an intertidal or tidal marsh area of an estuary.” See Or Laws

1979, ch 564, §§ 1, 5; see also former ORS 541.626 (1979) (mitigation provision).

282 Citizens for Resp. Devel. in The Dalles v. Walmart

result from the proposed fill”7 and “(e) Whether the proposed

fill is for streambank protection.” Id. The first addition

expressly captures Morse’s conclusion that DSL must make

the “unreasonable interference” determination by weighing

“public need for the fill” against any interference with the

public uses for which the water is to be preserved. 285 Or at

205. The second addition captures a regional consideration,

as we will explain when we describe the legislative history.

Finally, the 1979 legislature added an entirely new

provision that specifically addressed permits for a fill in

an estuary for a “nonwater dependent use.” Or Laws 1979,

ch 564, § 3a. That change preserves and cabins the specific

holding of the Morse majority by specifying that DSL is per-

mitted to issue “a permit for a substantial fill in an estuary

for a nonwater dependent use,” but “only if the fill is for a

public use and would satisfy a public need that outweighs

harm to navigation, fishery and recreation and if the pro-

posed fill meets all other criteria contained in [the statutes

governing fills].”8 Id.

Legislative history confirms that the 1979 legisla-

ture intended to codify those aspects of our decision in Morse,

although, as we discuss below, it made other substantive

changes as well.9 Representative Ed Stevenson, the chair of

the house subcommittee responsible for the bill, explained

that, with respect to the changes to former ORS 541.625(2)

(1977), “[w]hat we attempted to do here was to basically put

into law what the finding of the court was in the Morse case.”

Tape Recording, House Legislative Committee on Trade

and Economic Development, HB 2619, May 23, 1979, Tape

12, Side 1 (statement of Rep Ed Stevenson). He continued,

explaining that “[w]e attempted to put into the statute what

7

Paragraph (a) also specifies that “[w]hen the applicant for a fill 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.” Id.

8

The circumstance of a “public use” for the proposed fill was important to the

decision in Morse because the estuary was a body of water subject to the public

trust doctrine, which limits the government’s ability to impair the public’s inter-

est in the water. 285 Or at 201.

9

We explained in Gaines that we consider legislative history “ ‘for what it’s

worth.’ ” 346 Or at 171. The legislative history of the 1979 amendments provides

significant insight into the legislature’s intention.

Cite as 366 Or 272 (2020) 283

the court determined at this time and to make it clear that

that was the law henceforth. * * * We just adopted what the

court had said was the law.” Id.

Later, the senate committee that considered the bill

was given a similar explanation by committee staff—that

the amendments to former ORS 541.625 (1977) were “ ‘deal-

ing with’ ” this court’s decision in Morse and that

“ ‘[w]e have essentially in [that part of the bill] identified

what the Supreme Court had said: that is, the public need

for the fill, the social and economic and other public bene-

fits likely to result from the proposed fill when the direc-

tor is issuing his permit. [The Director] has got to balance

[subsections] (a) through (e).’ ”

Citizens, 295 Or App at 317 (quoting Tape Recording,

Senate Legislative Committee on Trade and Economic

Development, HB 2619, June 19, 1979, Tape 35, Side 2

(statement of Patricia Middelburg)). Committee Executive

Officer Middelburg also explained that subsection (e), which

requires consideration of “ ‘[w]hether the proposed fill is for

streambank protection,’ ” “ ‘is not referred to in the Supreme

Court case, but we added it because of a problem that occurs

in eastern Oregon.’ ” Id.

The statutory context and legislative history per-

suade us that DSL overestimates the significance of the

legislature’s post-Morse statutory amendments when it

contends that the legislature merely intended for DSL to

“reflect on” or “give thought to” the “public need” for a proj-

ect that will interfere with “the paramount policy of this

state to preserve the use of its waters for navigation, fish-

ing and public recreation.” DSL points to two aspects of the

1979 amendments to support its construction, but neither is

persuasive.

DSL first focuses on the text of ORS 196.825(3),

which directs DSL to “consider” the “public need” for or

“public benefit” from “the proposed fill or removal,” in addi-

tion to the other listed factors. Relying on a dictionary defi-

nition, DSL asserts that the ordinary meaning of “consider”

is “to reflect on : think about with a degree of care or caution

* * * to give thought to with a view to purchasing, accept-

ing, or adopting.” Webster’s Third New Int’l Dictionary 483

284 Citizens for Resp. Devel. in The Dalles v. Walmart

(unabridged ed 2002). Given that ordinary meaning, DSL

reasons that it is only required to “reflect on” or “give thought

to” the public need and benefit of the fill or removal, it is

not required to make an affirmative finding that the project

will serve a public need and have public benefit before issu-

ing a permit. DSL adds that requiring such an affirmative

determination of public need would require that DSL “find”

that factor, instead of “consider” it, which would be “gram-

matically untenable in the context of the statute as a whole.”

We have emphasized, however, that “[i]n construing

statutes, we do not simply consult dictionaries and inter-

pret words in a vacuum” because dictionaries “do not tell us

what words mean, only what words can mean, depending on

their context and the particular manner in which they are

used.” Cloutier, 351 Or at 96 (emphasis in original; citation

omitted). DSL’s citation to a dictionary definition is not suf-

ficient to persuade us that the legislature intended to create

a different requirement for permits than that identified by

the context and legislative history discussed above.

We emphasize that the phrase “the director shall

consider” was not new to the statute in 1979. The version

of the statute that this court construed in Morse also used

the phrase “the director shall consider” to introduce a list of

factors that included “[w]hether the proposed fill unreason-

ably interferes” with the state’s paramount policy. Former

ORS 541.625 (1977). Yet we discerned in that phrase a legis-

lative intention to require that DSL “determine[ ]” whether

“interference with water-related uses is unreasonable” and

to do so “by weighing the extent of the public need for the

fill against the interference with the named water-related

uses.” Morse, 285 Or at 205. As we have concluded, the

current statute retains that requirement—albeit with an

expanded category of “public” considerations.

DSL next argues that, by adding a specific require-

ment that DSL find “a public need that outweighs harm” for

a “substantial fill in an estuary for a nonwater dependent

use,” the 1979 legislature signaled—through contrast—its

intention that DSL never needs to do more than “reflect on”

or “think about” public need when the permit proposes to

fill a different body of water. The main problem with that

Cite as 366 Or 272 (2020) 285

argument is that the estuary-fill provision requires more

than a finding of public need; it also requires that the fill be

“for a public use.” Thus, the provision clearly affords estu-

aries extra protection from fills, which Morse suggests may

be required by the public trust doctrine. But it does not fol-

low that, by granting estuaries that heightened protection,

the legislature intended to abrogate Morse’s requirement

that, for all categories of fills, DSL must weigh the extent of

“public need” against “interference with water-related uses”

to determine whether the interference is “unreasonable.”

Indeed, as we have explained, the legislature intended to

retain that requirement.

The legislature, however, made one significant

change to the rule that we articulated in Morse. Although

Morse construed the statute to require DSL to balance any

interference against the “public need” for the project, the

1979 amendments broadened the factors that are part of the

“public” side of the weighing. The amendments directed DSL

to consider not only the “public need” described in Morse but

also the “social, economic or other public benefits likely to

result from the proposed fill” in determining whether the

proposed fill would “unreasonably interfere” with the para-

mount policy of the state. Or Laws 1979, ch 564, § 3a. In the

next session, the legislature again amended the list of fac-

tors that DSL must “consider” in issuing a permit to include

the “economic cost to the public if the proposed fill is not

accomplished.” Or Laws 1981, ch 796, § 1. As we explained

in Coos Waterkeeper, in 1981, “the representative for the

Coos Bay area introduced HB 2985 (1981) with the purpose

of increasing the emphasis given to economic factors in the

permitting process.” 363 Or at 371 (citing Exhibit A, Senate

Committee on Trade & Economic Development, HB 2985,

July 13, 1981 (letter from Rep Bill Grannell)).

Those changes, as well as our clarification of the

holding of Morse, persuade us that the Court of Appeals over-

stated the requirements of ORS 196.825 to the extent that

it construed the statute to “require[ ] DSL to find that the

public need for a proposed project predominates before DSL

has the authority to issue a wetland fill and removal per-

mit for the project.” Citizens, 295 Or App at 321. Rather, the

statute requires that, if DSL finds that the proposed fill will

286 Citizens for Resp. Devel. in The Dalles v. Walmart

“interfere with the paramount policy of this state to pre-

serve the use of its waters for navigation, fishing and public

recreation,” then DSL must determine whether the inter-

ference is “unreasonable” by weighing the interference with

public uses for which “waters of the state” are preserved

against the expanded list of public-benefit considerations.10

Thus, the Court of Appeals erred to the extent that it con-

strued ORS 196.825 to require that every permit for fill or

removal must be supported by a finding that “public need”

for the project “predominates.”

B. Application of Statutory Standard to the Permit in this

Case

Although DSL views that conclusion as requiring

us to reverse the decision of the Court of Appeals, we must

engage in further analysis to determine the appropriate dis-

position. We have explained that there are two components

to the limitation that ORS 196.825(1)(b) places on DSL’s

authority to issue a permit for fill or removal: either the proj-

ect will not interfere with the public uses for which “waters

of the state” are preserved, or the interference is “not unrea-

sonable” when weighed against the range of public benefits

that the legislature has directed DSL to consider. Because

DSL’s order does not reflect that it found either component

to be satisfied, we conclude that the order is not supported

by substantial evidence. We thus affirm the ultimate hold-

ing of the Court of Appeals that the case must be reversed

and remanded to the agency.

To explain that disposition, we turn to the order

in this case. Walmart determined that it would need to fill

some of the approximately nine acres of wetlands that are

scattered across the site on which it proposed to build a

store in The Dalles, so it submitted a permit application to

DSL pursuant to ORS 196.825. Following a public comment

period and an analysis and investigation by agency staff,

10

We understand the legislature to have contemplated a low threshold for

“interference.” In Morse, neither this court nor the agency doubted that the fill

would “interfere,” although the interference was limited to displacing clams and

other organisms and eliminating “some casual navigation of the recreational

kind.” We understand the legislature to have retained that low threshold with

subsequent amendments.

Cite as 366 Or 272 (2020) 287

DSL approved the permit.11 Citizens appealed within the

agency, and, following a hearing, DSL ultimately issued a

final order from which we take our description of the record.

Scattered throughout the proposed site are forty-

nine “emergent wetlands,” most of which “are classified

as vernal pools and are considered by the Department as

wetlands of conservation concern.” Several of the wetlands

contain a species known as Oregon Fairy Shrimp, which is

considered to be “globally vulnerable.” Walmart’s proposal

predicted a “permanent impact” to 2.17 acres of the wet-

lands on the site, including some that were occupied by fairy

shrimp. As mitigation for the permanent impacts to those

wetlands, Walmart proposed a combination of restoration,

creation, enhancement, and preservation to benefit approxi-

mately five acres of other wetlands on the property, many of

which “are potential fairy shrimp habitat.”

DSL began by discussing each of the factors that

ORS 196.825(3) directs it to “consider.” With respect to the

“public need” and “economic or other public benefits” of the

project, DSL observed that Walmart’s permit application

had claimed that consumers have “a need for low cost goods”

that would be better met by the addition of a Walmart store,

that the project would bring hundreds of temporary and

permanent jobs to the area, and that construction-related

activities “would inject over $19 million to the local econ-

omy.” DSL also observed that Citizens had challenged those

claims, asserting that existing area stores could address the

asserted consumer need and that the economic benefit for

the community that Walmart claimed would be outweighed

by the loss to the local economy from future closure of local

retailers “and the potential public costs of low wages and

minimal benefits of Walmart employees.”

11

Once DSL determines that a permit application is complete, it schedules a

public comment period. ORS 196.825(6)(a), (8)(a). The applicant is given an oppor-

tunity to respond and to modify the application to address issues. OAR 141-085-

0550(9); OAR 141-085-0560(5). DSL then reviews the application and comments

and may conduct an investigation before determining whether the conditions for

issuing a permit are met. OAR 141-085-0560(4); OAR 141-085-0565(1). DSL will

prepare written findings to document its decision in several situations, includ-

ing if the permit is for “[p]ermanent fill of two acres or more in wetlands.” OAR

141-085-0565(7).

288 Citizens for Resp. Devel. in The Dalles v. Walmart

Although DSL did not specify which of the asser-

tions—if any—it accepted, DSL ultimately found that “[t]he

record is inconclusive with regard to whether the project,

for which the fill or removal is proposed, will address a

public need” and also “is inconclusive regarding the social,

economic or other public benefits that may result from the

proposed project.” In addition, DSL found that the record

was “inconclusive” with respect to whether the public would

suffer “economic loss” from forgoing the new retail facility

for which the fill was proposed.

DSL then determined that the application met both

of the requirements for issuing a permit. First DSL con-

cluded that “the project is consistent with the protection,

conservation and best use of the water resources of this

state,” in part because “impacts to waters of the state were

minimized to the extent practicable and will be mitigated.”12

See ORS 196.825(1)(a). It reasoned that “[t]he creation of

new wetlands, restoration of previously filled wetlands and

enhancement of existing wetlands provides in-kind func-

tional replacement” and that “[t]he mitigation is expected to

maintain or slightly increase habitat for fairy shrimp and

related invertebrates.” Second, DSL reasoned that the pro-

posed fill-removal would not “unreasonably interfere with

the paramount policy of this state” because “[t]he Walmart

project is not located on a state owned waterway, and there

are no known public fishing or public recreation activities on

this site.” See ORS 196.825(1)(b).

It is the second determination that Citizens chal-

lenges as unsupported by the record. As we have explained,

there are two ways that a proposed fill or removal can sat-

isfy the requirement that the project will “not unreason-

ably interfere with the paramount policy of this state.” DSL

can determine that the project will not “interfere,” or DSL

can determine that the interference is not “unreasonable”

12

ORS 196.825(5) provides, in relevant part, that, “[i]f the director issues a

permit, the director may impose such conditions as the director considers neces-

sary to carry out the purposes of ORS 196.805 and 196.830 and subsection (1) of

this section and to provide mitigation for the reasonably expected adverse effects

of project development” and the “director shall impose, as conditions to any per-

mit, general authorization or wetland conservation plan, measures to provide

mitigation for the reasonably expected adverse effects of project development.”

Cite as 366 Or 272 (2020) 289

because it is outweighed by the public-benefit considerations.

But we do not understand DSL’s order to be supported by

either determination.

1. Whether there is interference

It appears that the Court of Appeals assumed that

DSL had found this project would interfere with the state’s

paramount policy to preserve waters of the state. That

assumption is not unreasonable given the record below. For

example, DSL’s final order repeatedly refers to “impacts”

that the project will have on the waters of the state gen-

erally, and on the wetlands in particular. However, DSL’s

order does not directly address the question of “interfer-

ence,” apart from the conclusion—described above—that

the project would not “unreasonably interfere” because of its

location. DSL’s arguments in this court have clarified that

it intentionally skipped the step of determining whether

the project would “interfere with the paramount policy of

this state” because, as it construes the requirement, filling

wetlands on “private land” will never “interfere” with the

state’s preservation of “waters of the state” for public pur-

poses. According to the position articulated by DSL at oral

argument, the requirement of ORS 196.825(1)(b) “applies to

state owned land, not to private land.” There are both fac-

tual and legal obstacles that defeat the argument.

First, DSL’s categorical proposition is not factually

sustainable because, as DSL acknowledged at oral argu-

ment, fill or removal of a private waterway on private land

“conceivably” could “impact what happens on a downstream

[public] river.” Moreover, as our analysis above should indi-

cate, we reject DSL’s premise that some categories of per-

mits issued under ORS 196.825 are categorically exempt

from the requirement that the fill or removal “not unreason-

ably interfere with the paramount policy of this state to pre-

serve the use of its waters for navigation, fishing and public

recreation.” The legislature has retained the construction

of the “unreasonable interference” requirement, which we

articulated in Morse, that for all projects that would interfere

with “waters of this state,” DSL must determine whether

the “interference” is “unreasonable” by “weighing the extent

of the public need for the fill against the interference with

290 Citizens for Resp. Devel. in The Dalles v. Walmart

the named water-related uses.” Morse, 285 Or at 205. The

legislature extended that requirement to permits for the fill

of wetlands on private property when it added “wetlands”

to the definition of “waters of the state” that are to be pre-

served. ORS 196.800(15); Or Laws 1989, ch 837, § 4. Indeed,

the legislature has adopted an additional, wetland-specific

policy, to “[p]romote the protection, conservation and best

use of wetland resources, their functions and values,” and

that policy specifically includes “protection of wetland val-

ues on private lands[.]” ORS 196.672(1), (9).13

2. Whether interference is “not unreasonabl[e]”

The Court of Appeals emphasized DSL’s finding

that the “public need” for the project is “inconclusive.” 295

Or App at 321. We have explained that the finding does not

necessarily preclude DSL from issuing the permit—even if

the project will interfere with the state’s paramount policy

for water resources—because the legislature has expanded

the public-benefit considerations that DSL weighs to deter-

mine whether interference is “unreasonable.” However, in

approving the permit in this case, DSL found all of the iden-

tified categories to be “inconclusive.” As set out above, DSL

found that

• “[t]he record is inconclusive with regard to whether

the project, for which the fill or removal is proposed,

will address a public need”;

• the record “is inconclusive regarding the social, eco-

nomic or other public benefits that may result from

the proposed project”; and

• the record is “inconclusive” with respect to whether

the public would suffer “economic loss” from for-

going the new retail facility for which the fill was

proposed.

In other words, DSL identified no “weight” to place

on the public-benefit side of the balance. Thus, absent a

finding that the project will not “interfere” with the “para-

mount policy of this state to preserve the use of its waters

13

The legislature added “wetlands” to “waters of the state” and also adopted

the additional wetlands policy in 1989. Or Laws 1989, ch 837, §§ 3, 4.

Cite as 366 Or 272 (2020) 291

for navigation, fishing and public recreation,” the record

does not support DSL’s determination that the project will

“not unreasonably interfere.” See ORS 196.825(1)(b). But, as

we have explained, the current record lacks a finding about

whether or not the project will “interfere.” We thus agree

with the Court of Appeals that the agency decision must

be reversed and remanded. See Drew v. PSRB, 322 Or 491,

500-01, 909 P2d 1211 (1996) (“agency’s failure to connect

permissibly its facts and its holding is fatal to the agency’s

order”); Bergerson v. Salem-Keizer School District, 341 Or

401, 415, 144 P3d 918 (2006) (quoting Drew, 322 Or at 500,

and reversing agency decision for failing to provide “the

essential linkage” between the facts of the case and its final

conclusion).

The decision of the Court of Appeals is affirmed. The

final order of the Department of State Lands is reversed,

and the case is remanded to the Department of State Lands

for further proceedings.