468 P.3d 410
Or.2020Background
- Kinzua Resources LLC held the permit and owned the Pilot Rock Landfill; Frontier Resources LLC and ATR Services Inc. were its two members and Gregory Demers was a member/officer.
- Kinzua failed to obtain required financial assurance and, after landfill stopped receiving waste in 2010, failed to perform statutory closure/post-closure duties.
- DEQ assessed penalties and the Environmental Quality Commission found Frontier, ATR, and Demers were persons “controlling” the site and imposed joint penalties equal to Kinzua’s.
- The Oregon Court of Appeals reversed, holding “controlling” means actively exercising control (i.e., akin to operating/management).
- The Oregon Supreme Court granted review, held “controlling” includes persons who have legal authority to control the site (whether exercised or not), and remanded to the Court of Appeals to consider remaining evidentiary challenges and related arguments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Meaning of “controlling” in ORS 459.205 & ORS 459.268 | “Controlling” means actively exercising restraining/directing influence; akin to an operator | “Controlling” includes persons who have the authority or power to control the site even if they have not exercised it | “Controlling” includes both exercising power and having power/authority to control; Court of Appeals’ narrower reading reversed |
| Conflict with LLC liability shield (ORS 63.165(1)) | Imposing liability on LLC members conflicts with statutory shield from company debts/obligations | ORS 63.165(1) bars vicarious liability but does not bar direct liability for a member’s own omissions | No conflict: members may be directly liable for their own omissions as persons “controlling” the site; shield prevents only vicarious liability |
| Sufficiency of evidence supporting control findings | Record lacks substantial evidence that Frontier/ATR (or Demers) had authority or actually controlled the site | Commission found members had authority and Demers exercised actual control in communications with DEQ | Court did not resolve evidentiary sufficiency; remanded to Court of Appeals to consider that argument under correct legal standard |
| Liability of Demers / agency-law defenses | Demers shielded by agency law or insufficient evidence of his control | Commission found Demers had actual control and exercised it (DEQ relied on his role as exclusive DEQ contact) | Court declined to decide agency-law claim; remanded for further consideration by Court of Appeals |
Key Cases Cited
- Penn v. Board of Parole, 365 Or 607 (framework for when courts defer to agency statutory interpretation)
- Coos Waterkeeper v. Port of Coos Bay, 363 Or 354 (framework for statutory construction and agency deference)
- State v. Gaines, 346 Or 160 (primacy of text/context in statutory interpretation)
- State v. Makin, 360 Or 238 (discussion of verb aspect and interpretation of progressive tense)
- State v. Gonzalez-Valenzuela, 358 Or 451 (distinction between stative and dynamic verb meanings)
- Cortez v. Nacco Materials Handling Group, 356 Or 254 (LLC member can be directly liable for omissions despite limited-liability shield)
- Kinzua Resources v. DEQ, 295 Or App 395 (Court of Appeals decision construing “controlling” as active exercise; reversed)