Central Lincoln PUD v. Dept. of Energy ( 2020 )

163
Argued and submitted December 20, 2018; general judgment reversed to
extent it sets aside “the Orders imposing the 2016 ESA” and requires “the ESA
amounts paid by Petitioners [to] be refunded,” supplemental judgment reversed,
remanded for further proceedings consistent with this opinion October 7, 2020
CENTRAL LINCOLN PEOPLE’S UTILITY DISTRICT,
a municipal corporation;
City of Hermiston, dba Hermiston Energy Services,
a municipal corporation;
Clatskanie People’s Utility District,
a municipal corporation;
Columbia River People’s Utility District,
a municipal corporation;
Consumers Power, Inc.,
an Oregon cooperative corporation;
Emerald People’s Utility District,
a municipal corporation;
Eugene Water & Electric Board,
a municipal corporation;
Northern Wasco People’s Utility District,
a municipal corporation;
Tillamook People’s Utility District,
a municipal corporation; and
Umatilla Electric Cooperative,
an Oregon cooperative corporation,
Plaintiffs-Respondents,
v.
OREGON DEPARTMENT OF ENERGY,
an agency of the State of Oregon;
and Janine Benner, in her official capacity as
the Director of the Oregon Department of Energy,
Defendants-Appellants.
Marion County Circuit Court
16CV18269; A165881
478 P3d 993
This appeal relates to challenges that petitioners filed in the trial court, pur-
suant to ORS 183.484, against orders that the director of the Oregon Department
of Energy (ODOE) issued in 2016. Each of the challenged orders required one
of the petitioners to pay an energy supplier assessment (ESA) to help fund
programs of ODOE and the Energy Facility Siting Council (council). On cross-
motions for summary judgment, the trial court agreed with petitioners that the
ESA is a tax, and the court entered a judgment including a declaration to that
164 Central Lincoln PUD v. Dept. of Energy
effect. The court also agreed with petitioners that, during the process leading up
to the enactment of the 2015 legislation that required issuance of the challenged
2016 ESA orders, ODOE had not complied with certain process requirements
set out in ORS 469.421(8)(b). As a remedy for that violation, the court set aside
the 2016 ESA orders. The court also entered a supplemental judgment awarding
petitioners attorney fees pursuant to ORS 183.497(1)(b) based on its determina-
tion that ODOE had acted without a reasonable basis in fact or in law. ODOE
appeals. Held: Even assuming, without deciding, that ODOE did not meet the
requirements of ORS 469.421(8)(b), the trial court erred when it set aside the
2016 ESA orders. The court also erred when it denied the part of ODOE’s cross-
motion for summary judgment in which ODOE argued that the 2016 ESA orders
should not be set aside even if ODOE had failed to comply with ORS 469.421(8)
(b). Additionally, the question of whether the ESA is a tax is moot on appeal, and,
under the circumstances presented by this case, the Court of Appeals declined to
exercise any discretion that it may have to address that moot point.
General judgment reversed to the extent that it sets aside “the Orders impos-
ing the 2016 ESA” and requires “the ESA amounts paid by Petitioners [to] be
refunded.” Supplemental judgment reversed. Remanded for further proceedings
consistent with this opinion.
Tracy A. Prall, Judge.
Michael A. Casper, Assistant Attorney General, argued
the cause for appellants. Also on the briefs were Ellen F.
Rosenblum, Attorney General, Benjamin Gutman, Solicitor
General, and Chris Perdue, Assistant Attorney General.
Brad S. Daniels argued the cause for respondents. Also
on the brief were Eric J. Kodesch, Samantha K. Sondag, and
Stoel Rives LLP.
Before DeHoog, Presiding Judge, and Aoyagi, Judge, and
Hadlock, Judge pro tempore.
HADLOCK, J. pro tempore.
General judgment reversed to extent it sets aside “the
Orders imposing the 2016 ESA” and requires “the ESA
amounts paid by Petitioners [to] be refunded.” Supplemental
judgment reversed. Remanded for further proceedings con-
sistent with this opinion.
Cite as 307 Or App 163 (2020) 165
HADLOCK, J. pro tempore
This appeal relates to challenges that petitioners
filed in the trial court, pursuant to ORS 183.484, against
orders that the director of the Oregon Department of Energy
(ODOE) issued in 2016. Each of the challenged orders
required one of the petitioners to pay an energy supplier
assessment (ESA) to help fund programs of ODOE and the
Energy Facility Siting Council (council). On cross-motions
for summary judgment, the trial court agreed with petition-
ers that the ESA is a tax, and the court entered a judgment
including a declaration to that effect. The court also agreed
with petitioners that, during the process leading up to the
enactment of the 2015 legislation that required issuance of
the challenged 2016 ESA orders, ODOE1 had not complied
with certain process requirements set out in ORS 469.421
(8)(b). As a remedy for that violation, the court set aside the
2016 ESA orders. The court also awarded petitioners attor-
ney fees pursuant to ORS 183.497(1)(b) based on its determi-
nation that ODOE had acted without a reasonable basis in
fact or in law. ODOE appeals.
As explained below, we conclude that—even assum-
ing, without deciding, that ODOE did not meet the require-
ments of ORS 469.421(8)(b)—the trial court erred when it
set aside the 2016 ESA orders. We also conclude that the
question of whether the ESA is a tax is moot on appeal, and,
under the circumstances presented by this case, we decline
to exercise any discretion we may have to address that moot
point. Finally, we reverse the trial court’s award of attorney
fees.
I. BACKGROUND: THE ESA AND THE
ODOE BUDGET PROCESS
A. The Requirements of ORS 469.421(8)(b) and (c)
For many years, energy resource suppliers in
Oregon (including electric and natural-gas utilities) have
been subject to annual assessments—the ESAs—that help
fund programs and activities of ODOE and the council. See
1
Here and elsewhere in this opinion, except where context requires other-
wise, we sometimes use the term “ODOE” to refer collectively to ODOE and its
director.
166 Central Lincoln PUD v. Dept. of Energy
ORS 469.421(8)(c) (describing assessments); ORS 469.421
(8)(i)(A) (defining “energy resource supplier”); see gener-
ally ORS 469.421(4) (1983) (setting out then-existing form
of the assessments funding ODOE).2 Each biennium, the
2
ORS 469.421(8) provides, in pertinent part:
“(a) In addition to any other fees required by law, each energy resource
supplier shall pay to the department annually its share of an assessment to
fund the programs and activities of the council and the department.
“(b) Prior to filing an agency request budget under ORS 291.208 for
purposes related to the compilation and preparation of the Governor’s bud-
get under ORS 291.216, the director shall determine the projected aggregate
amount of revenue to be collected from energy resource suppliers under this
subsection that will be necessary to fund the programs and activities of the
council and the department for each fiscal year of the upcoming biennium.
After making that determination, the director shall convene a public meet-
ing with representatives of energy resource suppliers and other interested
parties for the purpose of providing energy resource suppliers with a full
accounting of:
“(A) The projected revenue needed to fund each department program or
activity; and
“(B) The projected allocation of moneys derived from the assessment
imposed under this subsection to each department program or activity.
“(c) Upon approval of the budget authorization of the council and the
department by an odd-numbered year regular session of the Legislative
Assembly, the director shall promptly enter an order establishing the amount
of revenues required to be derived from an assessment pursuant to this sub-
section in order to fund programs and activities that the council and the
department are charged with administering and authorized to conduct
under the laws of this state, including those enumerated in ORS 469.030,
for the first fiscal year of the forthcoming biennium. On or before June 1 of
each even-numbered year, the director shall enter an order establishing the
amount of revenues required to be derived from an assessment pursuant to
this subsection in order to fund the programs and activities that the coun-
cil and the department are charged with administering and authorized to
conduct under the laws of this state, including those enumerated in ORS
469.030, for the second fiscal year of the biennium. The order shall take into
account any revisions to the biennial budget of the council and the depart-
ment made by the Emergency Board meeting in an interim period or by the
Legislative Assembly meeting in special session or in an even-numbered year
regular session.
“(d) Each order issued by the director pursuant to paragraph (c) of this
subsection shall allocate the aggregate assessment set forth in the order to
energy resource suppliers in accordance with paragraph (e) of this subsection.
“* * * * *
“(k) Orders issued by the director pursuant to this section shall be sub-
ject to judicial review under ORS 183.484. * * *.”
The legislature made a minor amendment to ORS 469.421(8) after the orders
in this case issued. Or Laws 2016, ch 117, § 71. That amendment does not affect
our analysis, and all references to the statute in this opinion are to the current
version, unless stated otherwise.
Cite as 307 Or App 163 (2020) 167
ODOE director must issue orders assessing ESAs to energy
resource suppliers after the legislature has approved bud-
gets for ODOE and the council. ORS 469.421(8)(c). The direc-
tor issues two sets of ESA orders, one for each fiscal year in
the biennium. Id. Those orders are final agency orders in
other than a contested case, subject to challenge under ORS
183.484. ORS 469.421(8)(k).
According to a joint stipulation of facts submitted
in conjunction with the parties’ cross-motions for summary
judgment (and consistent with the legislative history we have
been provided), “[b]efore and during the 2013 legislative ses-
sion, legislators, energy resource suppliers, and other stake-
holders became concerned about the budgeting process for
the ESA, and wanted more transparency and stakeholder
involvement in the process.” Responsive legislation included
the addition of a provision to ORS 469.421(8) requiring the
ODOE director—with respect to each future biennium—to
project the aggregate amount of ESAs that would be needed
in the upcoming biennium and to “convene a public meet-
ing with representatives of energy resource suppliers and
other interested parties for the purpose of providing energy
resource suppliers with a full accounting of” the “projected
revenue needed to fund each [ODOE] program or activity”
and the “projected allocation of moneys derived from [the
ESAs] to each [ODOE] program or activity.” ORS 469.421
(8)(b)(A), (B). The added provision requires the director to
make those determinations before ODOE files its agency
request budget for the upcoming biennium. ORS 469.421(8)(b).
B. Budgeting for the 2015-2017 Biennium
In 2014, ODOE held four meetings in which it pro-
vided certain budget information to interested parties. At
one of those meetings, an August 7, 2014, meeting of the
Energy Advisory Work Group, ODOE personnel gave an
overview of the department’s agency request budget for
2015-2017. With respect to the ESA, ODOE projected expen-
ditures of approximately $13.1 million for the 2015-2017
biennium. ODOE showed how those funds would be allo-
cated between budgeting categories like “personal services”
and “services and supplies.” However, ODOE did not indicate
how the ESA funds would be allocated to specific programs,
168 Central Lincoln PUD v. Dept. of Energy
such as “Cool Schools” or “Resource Planning & Economics.”
Some additional information about the ESA budget was pro-
vided at that meeting and the other 2014 meetings, includ-
ing how ESA funds had been spent on specific ODOE pro-
grams during the 2013-2015 biennium. ODOE asserts that
the documentation it provided in conjunction with the 2014
meetings provided the “full accounting” that ORS 469.421
(8)(b) required. Petitioners disagree. In their view, because
the documentation did not show how ESA funds would be
spent during the 2015-2017 biennium, it did not provide the
mandatory “full accounting.”3
After ODOE submitted its agency request budget,
the legislative process resulted in Senate Bill (SB) 5510
(2015), which approved ODOE’s budget for the 2015-2017
biennium. That legislation specified the amount of “other
funds” available to ODOE, including ESA funds, which a
budget note indicated would be limited to $13.1 million—
the amount that ODOE had specified in its agency request
budget. In compliance with ORS 469.421(8)(c), ODOE sub-
sequently issued the 2016 ESA orders that petitioners have
challenged in this judicial review proceeding.4 In aggregate,
the 2016 ESA orders issued by ODOE total approximately
half of the $13.1 million in ESA funds approved by SB 5510
for the 2015-2017 biennium.
II. THE JUDICIAL REVIEW PROCEEDING
Petitioners challenged the 2016 ESA orders issued
to them by jointly filing a petition for judicial review in the
trial court pursuant to ORS 183.484, a provision of the
Administrative Procedures Act (APA). As pertinent here,
petitioners asked the court to set aside the 2016 ESA orders
because ODOE had not complied with the “full accounting”
requirement of ORS 469.421(8)(b). Petitioners also sought
“a declaration that the ESA is a ‘tax’ and accordingly must
meet all constitutional requirements in order to be imposed,”
and they requested attorney fees under ORS 183.497.
3
Because we ultimately determine that we need not resolve whether ODOE
complied with ORS 469.421(8)(b) in conjunction with the 2014 meetings, we do
not discuss the information provided at those meetings in any greater detail.
4
With respect to ESA funds for the 2015-2017 biennium, the ODOE director
also issued a set of ESA orders for the 2015 fiscal year, in accordance with ORS
469.421(8)(c). Those 2015 orders are not at issue in this case.
Cite as 307 Or App 163 (2020) 169
The parties filed cross-motions for summary judg-
ment and, in conjunction with those motions, a joint stip-
ulation of facts describing the history of the 2013 amend-
ments to ORS 469.421(8)(b), the information provided at the
2014 meetings described above, and the process by which
ODOE’s budget was developed for the 2015-2017 biennium.
Petitioners’ summary judgment motion provided arguments
in favor of the positions asserted in their petition for judicial
review. They requested, among other things, that the court
enter an order “setting aside the Orders imposing the 2016
ESA and requiring ODOE to refund the ESA amounts” that
petitioners had paid. In response, ODOE argued, among
other things, that it had complied with the requirements
of ORS 469.421(8)(b), that the petitioners were not entitled
to have the 2016 ESA orders set aside even if ODOE had
not complied with ORS 469.421(8)(b), that the ESA is a fee
(not a tax), and that it would not matter if the ESA were
a tax because the statute creating the ESA originated as
a bill in the House of Representatives—House Bill (HB)
2259 (1981)—and complied with all pertinent constitutional
requirements.
After hearing argument, the trial court issued
a letter opinion in which it granted petitioners’ summary
judgment motion in part and denied ODOE’s cross-motion.
The court agreed with petitioners that ODOE had not pro-
vided a “full accounting” of how ESA funds would be allo-
cated to ODOE programs and activities, as ORS 469.421
(8)(b) requires. The court stated that ODOE’s failure to com-
ply with that requirement “deprived the representatives of
energy resource suppliers and other interested parties of
information the legislature intended them to have so that
they could fully and effectively engage in the legislative pro-
cess.” Based on its view that no other remedy “would ade-
quately address ODOE’s failure,” the court set aside the
2016 ESA orders, as petitioners had requested.
The letter opinion also expressed the trial court’s
agreement with petitioners that the ESA imposed by ORS
496.421(8) is a tax. In that regard, the court relied heavily on
Northwest Natural Gas Co. v. Frank, 293 Or 374, 381-82, 648
P2d 1284 (1982), which held that the then-extant version of
the ESA imposed a tax that was dedicated at least in part to
170 Central Lincoln PUD v. Dept. of Energy
the Common School Fund under Article VIII, section 2(1)(g),
of the Oregon Constitution because it was a tax measured
by the sale of oil or natural gas.5 However, the trial court
also ruled that, because ORS 469.421(8) itself originated in
the House of Representatives, imposition of that tax did not
violate the constitutional requirements for bills raising rev-
enue.6 The court further ruled that SB 5510 (2015) was a
budget bill that did not raise revenue, but merely authorized
expenditures, so it was “not subject to Oregon constitutional
requirements for bills raising revenue.”
In accordance with those rulings on the cross-
motions for summary judgment, the trial court entered a
general judgment that includes these declarations and other
provisions:
“1. The [ESA] under ORS 469.421(8)(a) is a tax.
“2. Senate Bill 5510 [(2015)] is not subject to the Oregon
Constitution’s requirements for bills raising revenue.
“3. ODOE and [its director] did not follow statutory
procedures: specifically, ODOE did not provide the full
accounting required by ORS 469.421(8)(b). Pursuant to
ORS 183.484, the Court finds that ODOE erroneously
interpreted a provision of law and that a correct interpreta-
tion compels the Court to set aside the Orders imposing the
2016 ESA. Therefore, the ESA amounts paid by Petitioners
shall be refunded.”
The court subsequently entered a supplemental judgment
ordering ODOE to pay petitioners’ attorney fees pursuant
to ORS 183.497(1)(b). That order was based on the court’s
determination that ODOE had acted without reasonable
5
The version of the ESA addressed by the court in Frank was imposed pur-
suant to former ORS 469.420, which—as a legislatively mandated result of the
court’s holding—was repealed and replaced with ORS 469.421(8)(c). Or Laws
1981, ch 792, §§ 4, 5. See Frank, 293 Or at 383-84 (because the ESA as imposed
by former ORS 469.420 was “a tax on energy resources sold,” by operation of the
1981 legislation, “ORS 469.420 [was] repealed” and legislation later codified at
ORS 469.421(8)(b) was “established in lieu thereof”).
6
The 1981 bill that resulted in repeal of former ORS 469.420 (following the
decision in Frank) and enactment of ORS 469.421(8) originated in the House
of Representatives, as House Bill (HB) 2259 (1981). See Or Laws 1981, ch 792
(so specifying). Legislation adding the “full accounting” requirement of ORS
469.421(8)(b) also originated in the House, as House Bill (HB) 2807 (2013). See Or
Laws 2013, ch 656 (so specifying).
Cite as 307 Or App 163 (2020) 171
basis in fact or in law, both when it failed to comply with
ORS 469.421(8)(b) and “when it insisted that the 2016 ESA
was a fee not a tax.”
III. THE PARTIES’ ARGUMENTS ON APPEAL
ODOE raises three assignments of error on appeal.
First, ODOE challenges the trial court’s ruling on the par-
ties’ cross-motions for summary judgment, focusing on
the trial court’s decision to set aside the 2016 ESA orders
based on the court’s determination that ODOE did not com-
ply with the “full accounting” requirement of ORS 469.421
(8)(b). ODOE argues both that it complied with the require-
ment and that, even if it did not comply, the trial court erred
when it set aside the 2016 ESA orders as a remedy for that
violation.
On the latter point, ODOE acknowledges that the
2016 ESA orders are orders in other than contested cases
that may be challenged pursuant to ORS 183.484, as ORS
469.421(8)(k) itself provides. Nonetheless, ODOE contends
that the legislature would not have intended a court to
invalidate final ESA orders—orders that ODOE issued
following the passage of legislation that required their
issuance—as a remedy for a procedural failing that occurred
earlier, before the pertinent legislative session. ODOE char-
acterizes the provisions of ORS 469.421(8)(b) (which imposes
the “full accounting” requirement as part of the budget
process preceding legislative action) and ORS 469.421(8)(c)
(which requires issuance of the ESA orders following legis-
lative approval of ODOE’s budget) as independent. ODOE
concludes that “a procedural violation in the 2014 * * * pro-
cess cannot be a sufficient basis to set aside the 2016 order
for the simple reason that the 2016 order is not based on the
2014 [agency request budget].” Instead, ODOE argues, its
director “has an independent statutory obligation to issue
the challenged [ESA] order based on the budget bill that the
legislature has ultimately adopted,” regardless of “any flaws
in procedure that may have led to the [agency request bud-
get].” ODOE also argues that, if petitioners were dissatisfied
with the information they received at the 2014 meetings,
they should have taken action then—by complaining to the
agency, by raising the issue through the political process,
172 Central Lincoln PUD v. Dept. of Energy
or by seeking judicial intervention before the legislature
enacted the budget bill.
In response, petitioners first assert that the court
correctly determined that ODOE had not complied with
the “full accounting” requirement of ORS 469.421(8)(b). In
addition, petitioners argue that the court acted correctly
in setting aside the 2016 ESA orders because ORS 183.484
authorizes that form of relief for an agency’s “[f]ailure to
follow statutorily required processes.” Petitioners observe
that the “full accounting” requirement of ORS 469.421(8)(b)
is mandatory and argue that the legislature would not have
intended to allow the agency to violate the statute without
consequence. Moreover, petitioners argue, ODOE’s duty to
issue the ESA orders pursuant to ORS 469.421(8)(c) once the
legislature approved the agency’s budget “does not excuse
its failure to comply with” the requirements of ORS 469.421
(8)(b). In response to ODOE’s assertion that petitioners
could have (and should have) expressed their dissatisfaction
with the process before the ESA orders issued, petitioners
contend that ODOE is impermissibly “attempt[ing] to shift
blame for its failures”; petitioners argue that any ability
they may have had to express dissatisfaction earlier in the
process “has no legal relevance to the issues in dispute.”7
In its second assignment of error, ODOE argues that
the trial court erred in declaring that the ESA imposed pur-
suant to ORS 469.421(8)(a) is a tax. In that regard, ODOE
argues that the question whether the ESA is a tax “was and
is moot,” and it asks us to vacate the trial court’s declara-
tion for that reason. As we understand ODOE’s mootness
argument, it contends that the question of whether the ESA
is a tax could have a practical effect, in this context, only if
the legislation that imposes the tax did not originate in the
House of Representatives, as Article IV, section 18, of the
Oregon Constitution requires of bills for raising revenue.
Because the trial court determined that the revenue-raising
aspect of the ESA did originate in the House,8 the court
7
Petitioners also assert that ODOE should be judicially estopped from argu-
ing that petitioners cannot obtain relief under ORS 183.484 in this action because
of arguments that ODOE made in prior litigation challenging ESA orders that it
issued for the 2015 fiscal year. We reject that argument without discussion.
8
See 307 Or App at 170 & n 6.
Cite as 307 Or App 163 (2020) 173
necessarily had to reject petitioners’ contention that impo-
sition of the ESA violated Article IV, section 18, regardless
of whether, for purposes of that constitutional provision, the
ESA is a tax. And, to the extent that petitioners disagree
with the trial court’s concomitant ruling that SB 5510 is not
the revenue-raising aspect of the ESA, petitioners did not
cross-appeal that aspect of the general judgment, so that
issue is not properly before this court. In sum, according to
ODOE, the question of whether the ESA is a tax is purely
abstract, given the trial court’s other rulings, and that
question was moot before the trial court and also is moot on
appeal. ODOE also argues on the merits that the ESA is not
a tax.
In response, petitioners first contend that the “ESA
as tax” question is not moot. Petitioners observe that energy
resource suppliers “remain subject to the ESA” and they
assert that the ESA’s “status as a tax—including the atten-
dant constitutional limitations—is meaningful.” Petitioners
also argue, on the merits, that the ESA is a tax.
Relatedly, petitioners cross-assign error to the trial
court’s declaration that SB 5510 was not a revenue-raising
bill, asserting that a cross-assignment is sufficient to chal-
lenge that ruling and a cross-appeal was not necessary.
ODOE’s third assignment of error challenges the
trial court’s award of attorney fees. ODOE primarily argues
that it acted with a reasonable basis in fact and in law, con-
trary to the trial court’s ruling. It also contends that the
trial court should not have awarded petitioners fees on the
“ESA as tax” issue because “[t]he tax status of the ESA was
ultimately irrelevant to petitioners’ failed challenge” to the
ESA’s constitutionality. Petitioners present contrary argu-
ments on both points.
IV. ANALYSIS
A. The Trial Court’s Decision to Set Aside the 2016 ESA
Orders
We begin with ODOE’s challenge to the trial court’s
ruling on the cross-motions for summary judgment and,
particularly, the court’s decision to set aside the 2016 ESA
174 Central Lincoln PUD v. Dept. of Energy
orders. For purposes of our analysis, we assume—without
deciding—that the trial court ruled correctly when it deter-
mined that the information that ODOE provided energy
suppliers in 2014 did not meet the “full accounting” require-
ment of ORS 469.421(8)(b). The question before us is whether
that kind of failing authorized the trial court to set aside the
2016 ESA orders as a remedy in this proceeding.
In an “other than contested case” proceeding, the
APA provides that a court may review a challenged order to
determine whether: (1) “the agency has erroneously inter-
preted a provision of law and that a correct interpretation
compels a particular action”; (2) “the agency’s exercise of
discretion” is impermissible for certain specified reasons; or
(3) the agency’s order “is not supported by substantial evi-
dence in the record.” ORS 183.484(5). Here, petitioners have
not asserted either that ODOE erroneously exercised its dis-
cretion or that the 2016 ESA orders are not supported by sub-
stantial evidence. Rather, their challenge to the 2016 ESA
orders asserts that ODOE erroneously interpreted the law
requiring it to provide a “full accounting” of how ESA funds
would be allocated in the 2015-2017 biennium and that, as
a result, ODOE did not fulfill its obligation to provide the
accounting, which (in APA terms) is the “particular action”
that ORS 469.421(8)(b) “compel[led].” ORS 183.484(5)(a).
The question, then, is what actions the APA authorized the
trial court to take if the court found (as it did) that ODOE
had failed in the way that petitioners claimed.
Petitioners and the trial court found the answer to
that question in ORS 183.484(5)(a), which provides:
“The court may affirm, reverse or remand the order. If
the court finds that the agency has erroneously interpreted
a provision of law and that a correct interpretation compels
a particular action, it shall:
“(A) Set aside or modify the order; or
“(B) Remand the case to the agency for further action
under a correct interpretation of the provision of law.”
(Emphasis added.)
Notwithstanding that judicial-review provision of
the APA, ODOE challenges the trial court’s authority to
Cite as 307 Or App 163 (2020) 175
set aside the 2016 ESA orders. ODOE argues that it was
required to issue the ESA orders once the legislature passed
SB 5510 in 2015, regardless of any procedural failures in the
preceding budget process. Put differently, ODOE contends
that the 2016 ESA orders are not based on the 2014 budget
process and, therefore, the trial court could not set aside the
orders as a remedy for any flaws in that process, including
any failure to provide the required “full accounting.” For the
reasons that follow, we agree.
The APA provides the means by which “any person
adversely affected or aggrieved by an order” may seek judi-
cial review of that order. ORS 183.480(1). Judicial review is
“of final orders” that agencies issue, ORS 183.480(2); with
certain exceptions not pertinent here, the APA does not
authorize courts to review agencies’ actions more generally.
Thus, judicial review of an order in other than a contested
case necessarily must focus on the order itself. That is, the
agency error that is the object of an ORS 183.484 petition for
judicial review must be an error that is somehow reflected in
the challenged order—either because the order is substan-
tively flawed (for example, based on incorrect interpretation
of substantive law) or because the order is the product of a
flawed agency process (flawed because in violation of statute
or an impermissible exercise of agency discretion). See ORS
183.484(5) (setting out bases on which court may set aside or
remand an order).
An example of judicial review focusing on process
may be found in Canby Manor Estates, LLC v. ODOT, 241
Or App 504, 251 P3d 214 (2011), on which petitioners rely
here. Canby Manor related to the Oregon Department of
Transportation’s (ODOT’s) order permitting construction of
a highway median that would restrict turns into and out of
the petitioner’s property. Id. at 506. A statute mandated that
property owners like the petitioner have an opportunity to
participate in the ODOT permitting process for such road
projects. Id. at 508. ODOT had not provided the petitioner
with that opportunity, and that was a basis on which the
petitioner challenged ODOT’s order. Id. at 506-09. The trial
court remanded the order to ODOT, and we affirmed, hold-
ing that ODOT’s failure to give the petitioner the statutorily
176 Central Lincoln PUD v. Dept. of Energy
mandated opportunity to participate in the permitting pro-
cess justified the remand under ORS 183.484. Id. at 509.
The circumstances presented in this case differ sig-
nificantly from those at issue in Canby Manor. The chal-
lenged order in Canby Manor was the direct product of a
flawed agency process. That is, ODOT could not properly
issue the order at all, given its failure to give the petitioner
the required opportunity to participate in the process. Here,
by contrast, a statute mandated that the ODOE director
issue the 2016 ESA orders after the legislature passed SB
5510 (2015). ORS 469.421(8)(c).
Thus, the 2016 ESA orders cannot be said to be a
product of ODOE’s budget process in 2014 or of any defi-
ciencies in that process.9 Rather, the orders are a product of
the 2015 legislature’s approval of ODOE’s budget by way of
SB 5510, which triggered the director’s mandatory duty to
issue ESA orders imposing assessments in amounts based
on the legislatively approved budget. ORS 469.421(8)(c). Any
flaws in the process that preceded passage of SB 5510 did
not mean that the ODOE director should not have issued
the 2016 ESA orders; indeed, the director had no choice but
to issue those orders. Accordingly, this case cannot properly
be analogized to Canby Manor.
Under the circumstances present here, we conclude
that any failure by ODOE to comply with the “full account-
ing” requirement of ORS 469.421(8)(b) in 2014 is not an
error that is reflected in the 2016 ESA orders. The inter-
vening action of the 2015 legislature—a separate branch of
government—meant that the 2016 ESA orders had to issue
without regard to any flaw in the preceding process. The
orders therefore are not a product of the 2014 process and
any failure by ODOE to provide energy supplies with a “full
accounting” as part of that process is not a basis for setting
aside the 2016 ESA orders.
In sum, the trial court erred when it granted peti-
tioners’ summary judgment motion in part, to the extent
9
Petitioners’ arguments relate solely to their argument that ODOE violated
ORS 469.421(8)(b) in 2014 before SB 5510 passed; they have not asserted that
anything that happened after the passage of that legislation was improper or
would justify setting aside the 2016 ESA orders.
Cite as 307 Or App 163 (2020) 177
that the court set aside the 2016 ESA orders and required
ODOE to refund the ESA amounts paid. It follows that
the court also erred when it denied ODOE’s cross-motion
for summary judgment, to the extent that the motion was
based on ODOE’s argument that the court should not set
aside the 2016 ESA orders even if ODOE had not complied
with ORS 469.421(8)(b).
B. The “ESA is a Tax” Declaration
We turn to the parties’ dispute about whether the
trial court erred in declaring that the ESA is a tax. When
considering that question—and whether the question is
moot—it is important to recall the context in which the dis-
pute arose. In their petition for judicial review, petitioners
did not simply seek an abstract declaration that the ESA
is a tax. Rather, petitioners argued that SB 5510, which
triggered issuance of the 2016 ESA orders, was a bill that
imposed a tax (the ESA) and, therefore, was required to
originate in the House under the “Origination Clause” of
Article IV, section 18. Consistently with that assertion, peti-
tioners’ summary judgment motion asked the trial court
to “declare that SB 5510 was a bill for raising revenue for
purposes of the Oregon Constitution, and that its passage
violated the Origination Clause.”10
Article IV, section 18, on which petitioners’ argu-
ment is based, provides:
“Bills may originate in either house, but may be amended,
or rejected in the other; except that bills for raising revenue
shall originate in the House of Representatives.”
In Bobo v. Kulongoski, 338 Or 111, 122, 107 P3d 18 (2005),
the Supreme Court set out a two-part test for determining
when a bill is a “bill for raising revenue” that must originate
in the House under Article IV, section 18:
“The first is whether the bill collects or brings money into
the treasury. If it does not, that is the end of the inquiry.
10
Petitioners also argued below that, in addition to originating in the House
of Representatives, the legislation was required to pass with a three-fifths vote
pursuant to Article IV, section 25, of the Oregon Constitution. However, petition-
ers have not raised any argument under section 25 on appeal, and we therefore
do not refer to that provision further.
178 Central Lincoln PUD v. Dept. of Energy
If a bill does bring money into the treasury, the remaining
question is whether the bill possesses the essential features
of a bill levying a tax.”
Bobo is important here because it demonstrates that
the question whether a bill imposes a “tax”—as petitioners
claim is true of SB 5510—ultimately has practical signifi-
cance for purposes of the Origination Clause only if the bill
also collects or brings money into the treasury. Id. Thus,
under Bobo, petitioners could prevail on their Origination
Clause argument only if they established both that SB 5510
possessed the essential features of a bill levying a tax (or, as
petitioners put it in shorthand, that the ESA is a tax) and
that SB 5510 brought money into the treasury.
The trial court ruled against petitioners on the
second point. In its view, SB 5510 was a budget bill that
did not bring money into the treasury. The court also ruled
that ORS 469.421(8)(a)—the statute that creates the ESA—
“correctly originated in the House of Representatives as HB
2259 [(1981)] and the amended HB 2807 (2013)” and that the
statute therefore “does not violate the Oregon constitutional
requirements for bills raising revenue.” That is, as ODOE
puts it on appeal, the trial court concluded that “the law that
authorized raising revenue through the ESA was not SB
5510, as petitioners argued, but rather the laws codified in
ORS 469.421(8), which had originated in the House and the
constitutionality of which was undisputed.” As necessarily
follows from the trial court’s ruling that SB 5510 did not bring
money into the treasury, the general judgment declares that
SB 5510 “is not subject to the Oregon Constitution’s require-
ments for bills raising revenue.” Nonetheless, the judgment
also declares that “[t]he [ESA] under ORS 469.421(8)(a) is a
tax.”
On appeal, ODOE argues that the trial court erred
in declaring that the ESA “is a tax” because, once the court
determined that SB 5510 did not bring money into the trea-
sury, the question of whether the ESA is a tax became moot.
We reject that argument for lack of preservation. Although
ODOE made a mootness argument below in passing, it
related to a different subject. ODOE has not pointed to
anything in the record (and we have not found anything)
Cite as 307 Or App 163 (2020) 179
demonstrating that ODOE argued to the trial court that,
once it determined that SB 5510 did not bring money into
the treasury, the court should not go on to declare whether
the ESA is a tax. And because the mootness of a “matter[ ]
of public interest” does not, standing alone, deprive a court
of power to rule on that issue, Couey v. Atkins, 357 Or 460,
520, 355 P3d 866 (2015), the question whether the trial
court erred by ruling on a moot point is subject to preserva-
tion principles. Because ODOE did not argue below that the
“ESA as tax” question was moot in light of the trial court’s
other rulings, we do not address further whether the trial
court erred by addressing that question.
Nonetheless, under the circumstances present here,
we decline to address whether, on the merits, the trial court
erred when it declared that the ESA is a tax. As explained
above, that declaration could have practical significance (at
least, in the context of this case) only if the law that imposed
the ESA brought money into the treasury and that law did
not originate in the House. ODOE argued below, and the
trial court agreed, that the law that imposed the ESA and
brought money into the treasury is ORS 469.421(8)(a) itself,
not SB 5510. The general judgment includes a declaration so
stating: “Senate Bill 5510 * * * is not subject to the Oregon
Constitution’s requirements for bills raising revenue.”
Petitioners challenge that aspect of the judgment
in their cross-assignment of error, asserting that the trial
court erred when it declared “that SB 5510 was not a ‘bill
for raising revenue’ ” for purposes of the Origination Clause.
But because petitioners seek modification and reversal
of an express declaration in the judgment, a cross-appeal
was needed to bring that issue before this court, not sim-
ply a cross-assignment of error. See ORAP 5.57(2) (a cross-
assignment is appropriate only if, among other things, “the
respondent does not seek to reverse or modify the judgment
on appeal”); Truck Insurance Exchange v. Friend, 253 Or App
527, 528 n 2, 291 P3d 743 (2012), rev den, 353 Or 562 (2013)
(a cross-appeal was necessary, and the respondent’s cross-
assignment of error was insufficient, where the respondent
sought modification and reversal of part of the judgment,
“rather than reversal of an intermediate ruling of the trial
court”).
180 Central Lincoln PUD v. Dept. of Energy
Thus, we are not able to address whether the trial
court erred when it ruled that SB 5510 did not bring money
into the treasury and, therefore, declared that SB 5510 “is
not subject to the Oregon Constitution’s requirements for
bills raising revenue.” And, unless we addressed that point,
it would be an abstract exercise for us to analyze whether
the ESA is a tax, as that question has no practical signifi-
cance for purposes of the Origination Clause unless the bill
that levies the tax also brings money into the treasury—
precisely the question that is not properly before us on appeal.
Consequently, anything we said about whether the ESA is a
tax would not have any practical effect on the parties. Thus,
regardless of whether the “ESA as tax” question was moot
below, it is a moot question as presented in this appeal. See
Kerr v. Bradbury, 340 Or 241, 244, 131 P3d 737, adh’d to on
recons, 341 Or 200 (2006) (when a court’s decision no lon-
ger would have a practical effect on the parties, the case is
moot, and any opinion the court issued would be advisory).
Moreover, that question would be challenging to analyze as
an abstract matter, without referring to the aspect of the
Origination Clause analysis that is not properly before us
on appeal, as the term “tax” can have different meanings in
different contexts. Under the circumstances, we therefore
decline to exercise any discretion we might have to address
that issue. See Couey, 357 Or at 522 (courts are not required
to rule in moot cases, but they must determine “whether it is
appropriate to adjudicate an otherwise moot case under the
circumstances of each case”).11
C. Attorney Fees
In a judicial review proceeding under ORS 183.484,
an award of attorney fees to the petitioner is mandatory “if
the court finds in favor of the petitioner and determines that
11
In some circumstances, a challenge to a trial court’s ruling that otherwise
would be moot on appeal is not moot because we must address the correctness of
that ruling to determine whether the trial court erred in awarding attorney fees.
See, e.g., Select Reform Committee of Jefferson v. City of Jefferson, 306 Or App 239,
247, 474 P3d 399 (2020) (because challenged attorney fee award was premised on
the correctness of the trial court’s ruling on the merits, that award prevented the
merits issue from being moot). As the next section of this opinion indicates, we
need not resolve the “ESA as tax” question to determine whether the trial court
erred in awarding petitioners attorney fees, so the attorney fee award does not
prevent the question from being moot.
Cite as 307 Or App 163 (2020) 181
the state agency acted without a reasonable basis in fact
or in law.” ORS 183.497(1)(b). Here, having ruled largely in
petitioners’ favor on the cross-motions for summary judg-
ment, the trial court imposed attorney fees under ORS
183.497(1)(b) based on its determination that ODOE acted
without a reasonable basis in fact or in law when it failed to
follow the requirements of ORS 469.421(8)(b) and “when it
insisted that the 2016 ESA was a fee not a tax.”
For the reasons that follow, we reverse the supple-
mental judgment, which reflects the trial court’s award of
attorney fees. First, with respect to ODOE’s alleged viola-
tion of ORS 469.421(8)(b), we have reversed the trial court’s
decision to set aside the 2016 ESA orders as a remedy for any
such violation. Consequently, even assuming that ODOE did
not comply with ORS 469.421(8)(b), petitioners are not enti-
tled to any relief in this proceeding as a result. Petitioners
are not entitled to attorney fees under ORS 183.497(1)(b) in
relation to an issue on which they ultimately did not pre-
vail, and which will not result in them obtaining any sort
of relief from ODOE’s order. See G.A.S.P. v. Environmental
Quality Commission, 222 Or App 527, 540, 195 P3d 66 (2008)
(a decision is “in favor” of a petitioner for purposes of ORS
183.497(1) if the court has resolved a dispute so that some
significant portion of the challenged agency order is “altered
or invalidated in a manner which is (or appears ultimately
likely to be) to the petitioner’s benefit”) (internal quotation
marks omitted).
Second, although we have declined to resolve
whether the ESA is a tax, we conclude that ODOE did not act
“without a reasonable basis in fact or in law” when it argued
that the ESA is not a tax, but a fee. An agency’s erroneous
interpretation of a law does not, by itself, establish that the
agency’s interpretation was unreasonable so as to mandate
an award of attorney fees. Kaib’s Roving R.Ph. Agency v.
Employment Dept., 338 Or 433, 446, 111 P3d 739 (2005) (“An
agency’s interpretation of a statute may be legally incorrect
but not unreasonable. In such a case, a mandatory award of
fees is not appropriate.”). Accordingly, fees will not be justi-
fied under ORS 183.497(1)(b) where “reasonable minds could
differ” as to the law. North Pacific Supply Co., Inc. v. Emp.
Div., 100 Or App 553, 558, 787 P2d 495, rev den, 310 Or
182 Central Lincoln PUD v. Dept. of Energy
121 (1990); see McKean-Coffman v. Employment Div., 314 Or
645, 649, 842 P2d 380 (1992) (agency’s reliance on the plain
meaning of a statutory term, even though ultimately erro-
neous, had a reasonable basis in law).
Thus, appellate courts have upheld or imposed
fees under ORS 183.497(1)(b) only in more extreme circum-
stances, such as when (1) an agency either ignored provi-
sions of its own governing statutes or was unaware of them,
Kaib’s, 338 Or at 446; (2) an agency “was well aware that its
position had no statutory basis,” White v. Employment Div.,
77 Or App 35, 40, 711 P2d 196 (1985); (3) an agency acted
contrary to “a well-known and understood rule of admin-
istrative law to which an agency can fairly be expected to
adhere without prompting,” Douglass v. Adult and Family
Services Div., 64 Or App 439, 442, 668 P2d 1232 (1983);
or (4) an agency seemed “incapable of following” pertinent
“decisional law” that was “extensive, well-settled and clear
enough for an agency’s guidance,” and the agency’s action
was “arbitrary to a significant degree.” Ponderosa Inn, Inc.
v. Employment Div., 64 Or App 443, 446, 668 P2d 1233,
rev den, 296 Or 120 (1983).
Here, the trial court ruled that ODOE had acted
unreasonably in arguing that the ESA is not a tax because
that argument “was counter to case law addressing an
almost identical version of the law.” We understand the trial
court to have been referring to Frank, 293 Or 374, on which
the court had relied in ruling in petitioners’ favor on the
merits of the “ESA as tax” question. In our view, ODOE did
not act unreasonably (and has not acted unreasonably on
appeal) in arguing that Frank does not answer the question
of whether the present version of the ESA is a tax for pur-
poses of the Origination Clause analysis. In arguing that the
ESA is a fee, not a tax, ODOE has relied on decisions of this
court and the Supreme Court that discuss the factors that
distinguish taxes from fees, and it has applied those fac-
tors to the present version of the ESA in asserting that the
ESA is not a tax. Moreover, ODOE has not ignored Frank,
overlooked its holding, or otherwise acted analogously to the
agencies whose actions mandated attorney fee awards in
the cases listed above. To the contrary, ODOE has argued
that Frank does not control because it analyzed whether
Cite as 307 Or App 163 (2020) 183
the then-extant version of the ESA was a tax for purposes
of a different provision of the Oregon Constitution, not the
Origination Clause. On appeal, ODOE also has pointed out
that the Frank opinion was not focused on distinguishing
taxes from fees and that the opinion seems to have used
those terms interchangeably in referring to the version of
the ESA at issue in that case.
Whether or not ODOE’s arguments would prevail
if presented on appeal in a case in which the “ESA as tax”
question was not moot, those arguments have a reasonable
basis in law, and they had a reasonable basis as presented
to the trial court. The trial court therefore erred when it
awarded petitioners attorney fees under ORS 183.497(1)(b).
V. CONCLUSION
The trial court erred when it granted in part peti-
tioners’ motion for summary judgment, to the extent that
the court agreed with petitioners that the 2016 ESA orders
should be set aside. The court also erred when it denied
the part of ODOE’s cross-motion for summary judgment in
which ODOE argued that the 2016 ESA orders should not
be set aside even if ODOE had failed to comply with ORS
469.421(8)(b). We therefore reverse the general judgment
to the extent that it sets aside the 2016 ESA orders and
requires ODOE to refund the “ESA amounts” that petition-
ers paid. We do not address whether the trial court erred
when it declared that “Senate Bill 5510 * * * is not subject to
the Oregon Constitution’s requirements for bills raising rev-
enue” because that question is not properly before us. We do
not address whether the trial court erred when it declared
that the ESA is a “tax” because that question is moot in the
context of this appeal. We reverse the supplemental judg-
ment awarding attorney fees, and we remand for further
proceedings consistent with this opinion.
General judgment reversed to extent it sets aside
“the Orders imposing the 2016 ESA” and requires “the ESA
amounts paid by Petitioners [to] be refunded.” Supplemental
judgment reversed. Remanded for further proceedings con-
sistent with this opinion.