NAKAMOTO, J.
Petitioner Water Watch of Oregon, Inc. seeks judicial review of three separate final orders issued in contested cases by the Water Resources Department (the department) that were decided based on a consolidated record, and which we have consolidated for purposes of argument and opinion. In those three orders, the department granted to respondents the City of Lake Oswego,
We conclude that the department's determination that the permits, as conditioned, will maintain the persistence of listed fish species in the affected waterway lacks both substantial evidence and substantial reason. The department based its decision on the distinction between a short-term drop below persistence flows, which will not affect the persistence of listed fish species, and a long-term drop below persistence flows, which will affect the persistence of listed fish species. However, the record lacks substantial evidence of what a short-term drop below persistence flows means versus a long-term drop. Additionally, the department failed to adequately explain how its findings support its conclusion that the undeveloped portions of the permits, as conditioned, will maintain the persistence of the listed fish species when, on their face, the conditions fail to ensure that diversion of the undeveloped portions of the permits will not contribute to long-term drops below persistence flows. We reject all of petitioner's remaining arguments on judicial review, and we reverse and remand all three final orders to the department for further consideration.
The municipal parties are holders of eight separate water-right permits for municipal use that have points of diversion in the lower 3.1 miles of the Clackamas River (affected reach or lower reach).
That condition required the department to find that the "undeveloped portion" of the municipal parties' permits are "conditioned to maintain, in the portions of waterways affected by water use under the permit, the persistence of fish species listed as sensitive, threatened or endangered under state or federal law." ORS 537.230(2)(c). The statute requires the department to "base its finding on existing data and upon the advice of the State Department of Fish and Wildlife." Id. By rule, the department's finding is limited to effects "related to streamflow as a result of use of the undeveloped portion of the permit and further limited to where, as a result of use of the undeveloped portion of the permit, [the Oregon Department of Fish and Wildlife (ODFW)] indicates that streamflow would be a limiting factor for the subject listed fish species." OAR 690-315-0080(2).
With that background in mind, we turn to the record developed below.
The City of Lake Oswego is the holder of two water right permits at issue in these cases. Permit S-32410, which was granted to the city on October 19, 1967, authorizes the city to use up to 50.0 cubic feet per second (cfs) of water from the Clackamas River. "Construction of the water development project was to be completed by October 1, 1969, and complete application of water was to be made on or before October 1, 1970." Permit S-37839, which was granted to the city on June 27, 1975, authorizes the city to use up to 9.0 cfs of water from the Clackamas River. "Construction of the water development project was to be completed by October 1, 1977, and complete application of water was to be made on or before October 19, 1978."
The city had received multiple prior extensions of times for both permits, with the most recent extensions setting all permit deadlines on October 1, 2000. On July 1, 2003, the city submitted to the department the current requests to extend the deadlines on both permits to October 1, 2040. The undeveloped portion of Permit S-32410 is 25.0 cfs, and Permit S-37839 is 9.0 cfs.
North Clackamas County Water Commission (North Clackamas)
Permit S-35297, which was granted to Oak Lodge Water District on August 25, 1971, and transferred to North Clackamas in 2004, authorizes North Clackamas to use up to 62.0 cfs of water from the Clackamas River. "Construction of the water development project was to be completed by October 1, 1973, and complete application of water was to be made on or before October 1, 1974." The department granted multiple prior extensions of time for Permit S-35297, with the most recent extending all permit deadlines to October 1, 2000. In April 2003, Oak Lodge Water District (predecessor to North Clackamas) submitted an application to extend Permit S-35297, which North Clackamas amended in 2005 to request an extension to October 1, 2030. The undeveloped portion of that permit is 29.01 cfs.
South Fork Water Board (South Fork)
Permit S-9982, which was granted to the Cities of Oregon City and West Linn on January 19, 1931, and later transferred to South Fork, authorizes South Fork to use up to 30.0 cfs of water from tributaries to the Clackamas River (20.0 cfs from the South Fork Clackamas River and 10.0 cfs from Memaloose Creek). The permit did not contain construction or full application dates and, as a result, the department originally advised South Fork that it did not have to obtain extensions of time for the permit. However, in August 2004, the department advised South Fork that it would need to apply for an extension. In August 2006, South Fork submitted an application to extend Permit S-9982 to October 1, 2038. The undeveloped portion of that permit is 27.0 cfs.
Permit S-22581, which was granted to the South Fork Water Commission (the predecessor to South Fork) on January 22, 1954, authorizes South Fork to use up to 60.0 cfs of water from the Clackamas River. "Construction of the water development project was to be completed by October 1, 1955, and complete application of water was to be made on or before October 19, 1956." The department granted multiple prior extensions for Permit S-22581, with the most recent extending all permit deadlines to October 1, 1999. In December 2003, South Fork submitted an application to extend deadlines to October 1, 2049. The undeveloped portion of Permit S-22581 is 37.6 cfs.
Pursuant to the fish-persistence requirement in ORS 537.230(2)(c), and after receiving supplemental information from the municipal parties, the department forwarded all eight extension applications to ODFW to review the effect of development of the undeveloped portions of the permits on listed fish species in the lower reach of the Clackamas River. In May 2007, ODFW issued letters to the department for each of the municipal parties' eight applications that took into account the effect of all eight extension requests and contained identical advice.
From April to June, ODFW identified a persistence flow of 800 cfs, decreasing to 650 cfs in June. It advised that,
For July and August, ODFW identified a persistence flow of 650 cfs, which, on occasion, would not be met. ODFW advised:
(Emphasis and boldface in original.)
From September to November, ODFW identified a persistence flow of 650 cfs to September 15 and 800 cfs after September 15. ODFW advised:
(Emphasis and boldface in original.)
From December to March, ODFW identified a persistence flow of 800 cfs, and it advised that it did not anticipate flow-related issues during that time of year. However, ODFW recommended that, "if targeted flow levels cannot be met[,] then the severity of the measures taken should be reflective of how much the recommended flows are being missed by and the percentage of water that is withdrawn by the municipality vs. the overall streamflow level."
After receiving that advice, in November 2007, the department issued proposed final orders (PFOs) that granted the requested extensions of time on all eight of the municipal parties' permits. Based on ODFW's advice, the department found that use of the undeveloped portions of the permits would not maintain the persistence of listed fish species in the affected reach and thus imposed conditions on the permits to maintain fish persistence. Those conditions included ODFW's recommended minimum flow levels by season and set out the following conditions:
ODFW concurred in a one-sentence email that the conditions included in the PFOs were consistent with ODFW's advice to the department.
Both petitioner and South Fork protested and requested a contested case hearing for all eight extension orders, which were then consolidated by the administrative law judge (ALJ). In March 2010, the ALJ held a three-day contested case hearing that was split into four parts. The first part addressed issues common to all eight applications, including matters related to fish persistence, and the remaining three parts addressed issues individual to each permit holder.
Before holding the hearing, the ALJ addressed matters raised by the parties in their motions for summary determinations. As relevant here, the ALJ concluded that ORS 537.230 does not require the department to consider climate change in setting fish-persistence conditions. In accordance with that determination, at the hearing, the ALJ excluded from evidence the exhibits that petitioner offered related to the effect of climate change on Oregon's municipal water supplies and fish and wildlife. The ALJ also excluded as irrelevant letters authored by the Oregon Department of Environmental Quality (DEQ) in 2001 and 2003 that recommended that the department deny applications (not at issue in these cases) for water diversions from the Clackamas River because the lower reach was not meeting water quality standards for temperature, which negatively affects fish.
In August 2010, the ALJ issued three separate proposed orders — one for Lake Oswego's permits, one for North Clackamas's permits, and one for South Fork's permits — that rejected each of the protests and affirmed the department's PFOs. The three orders contained the same conclusions and recommendations with respect to the fish-persistence requirement in ORS 537.230(2)(c). The ALJ interpreted that statutory requirement as "leav[ing] the [d]epartment with no option but to follow the advice from ODFW." Based on that view of the statute, the ALJ concluded that he could not "go behind" the advice provided by ODFW to determine whether it was correct or incorrect. Because the ALJ found that the department had obtained and applied ODFW's advice, with "one exception," he concluded that, "[a]s [the department] argued, the inquiry about fish persistence of listed fish stops there."
The one exception the ALJ had to the department's PFOs was a modification to the yearly meeting condition. The ALJ recommended the following modification:
All parties, including the department, filed exceptions to the ALJ's proposed orders.
In January 2011, the department issued amended proposed orders that incorporated much of the ALJ's proposed orders, but also modified and added to them in significant ways.
The most significant modification made by the department pertained to what it understood its role to be with regard to the fish-persistence requirement in ORS 537.230(2)(c). The department deleted the ALJ's entire analysis on that issue and summed up its own conclusions as follows:
(Emphases in original.)
The department also admitted and considered petitioner's climate-change exhibits that
Based on the above conclusions, the department adopted all of the ALJ's findings of fact, with one partial sentence deletion, but also made 35 additional findings of fact.
The department then concluded that, in these cases, ODFW's advice was based on existing data, the department's conditions were based on that advice, and ODFW's concurrence with the department's conditions was substantial evidence that the department's "finding and conditions will result in the maintenance of the persistence of listed fish species." The department also concluded that any party could submit additional existing data to demonstrate that the weight of evidence requires different conditions, but that petitioner had not met that burden here.
With regard to the annual meeting condition that the ALJ had modified, the department agreed that the condition as stated in the PFOs "failed to fully incorporate the ODFW Advice." The final conditions placed on each of the municipal parties' permits included a modified meeting condition, as follows:
On judicial review, petitioner raises five assignments of error: (1) the department's findings regarding fish persistence are not supported by substantial evidence or substantial reason; (2) the department's application of the statutory fish-persistence requirement in the final orders is contrary to law; (3) the department unlawfully modified the ALJ's findings of fact; (4) the ALJ failed to follow prescribed administrative procedures, which unlawfully impaired the fairness of the proceedings; and (5) the department unlawfully considered petitioner's excluded climate-change exhibits without first reopening the contested case hearing before the ALJ and unlawfully excluded the DEQ letters.
We first address petitioner's second assignment of error, which requires us to construe the fish-persistence requirement in ORS 537.230(2)(c). As noted, that provision provides:
Petitioner argues that the department's interpretation and application of ORS 537.230(2)(c) in its orders was contrary to law. Because the disputed statutory phrase is part of a regulatory scheme administered by the department, our standard of review depends on whether the disputed phrase is an exact term, an inexact term, or a delegative term. Springfield Education Assn. v. School Dist., 290 Or. 217, 223, 621 P.2d 547 (1980). The Supreme Court has summarized the different standards:
Petitioner and the department agree that the phrase — "maintain * * * the persistence of [listed] fish species" — is an inexact term under Springfield. The municipal parties, however, argue that it is a delegative term. We agree with petitioner and the department that the phrase is an inexact term. It is a phrase that expresses a complete legislative policy to ensure that further development of municipal permits will maintain fish persistence, but it is not so precise that it is an "exact term." We reject the municipal parties' contention that the phrase must be delegative merely because the legislature did not set forth factors for the department to consider in setting conditions. The absence of factors does not negate that the legislature expressed a complete policy for the department to implement. That the agency must use judgment to determine what conditions it will need to impose on individual applications for extensions of time to effect that complete policy statement is what makes the term inexact. Thus, we must determine whether the department's interpretation and application of ORS 537.230(2)(c), as embodied in its final orders, is consistent with the legislature's intent in using the words that it did. Coast Security Mortgage Corp., 331 Or. at 354, 15 P.3d 29.
In discussing the construction of ORS 537.230(2)(c), the parties focus solely on the phrase "maintain * * * the persistence of [listed] fish species." However, in construing that phrase, we must also take into account the context of the surrounding language, which provides that the department may allow an extension of time if, among other things, "the department finds that the undeveloped portion of the permit is conditioned to maintain, in the portions of waterways affected by water use under the permit, the persistence of [listed] fish species." What the two other major phrases of the statute mean has already been addressed. In a prior case, we concluded that "[t]he text, context, and legislative history of ORS 537.230(2) indicate that the `undeveloped portion of the permit' is to be measured by reference to the maximum rate of water applied to beneficial use before the expiration of the development deadline in the permit or last-issued extension."
We begin with the plain meaning of the phrase. "Conditioned," when used as a verb, means "to invest with, limit by, or subject to conditions: burden with a condition: make conditional." Webster's Third New Int'l Dictionary 473 (unabridged ed 2002) (boldface in original). "Condition," as a noun, in turn means
We conducted a lengthy review of the legislative history of the enactment of ORS 537.230(2)(c) in WaterWatch, 259 Or.App. at 737-41, 316 P.3d 330. In short, the legislature amended ORS 537.230 in 2005 following our decision in WaterWatch v. Water Resources Commission, 193 Or.App. 87, 88 P.3d 327 (2004), vac'd and rem'd, 339 Or. 275, 119 P.3d 221 (2005), to address concerns that the "decision was contrary to [the department's] long-standing interpretation and application of the statute * * * and thus raised concerns about the viability of existing municipal permits and the ability of municipalities to plan for future water supply." WaterWatch, 259 Or.App. at 738, 316 P.3d 330. The original bill did not include the fish-persistence condition found in subsection (2)(c).
Id. at 739, 740, 316 P.3d 330 (brackets in original).
In addition, in statements on the Senate and the House floor, Senator Ringo and Representative Jenson specifically addressed the intended meaning of the phrase "maintain * * * the persistence of fish species." On the Senate floor, Senator Ringo stated:
Tape Recording, Senate Floor Debate, HB 3038, June 15, 2005, Tape 186, Side B (statement of Sen Charlie Ringo). On the House floor, Representative Jenson stated:
Tape Recording, House Floor Debate, HB 3038, June 17, 2005, Tape 136, Side B to Tape 135, Side B (statement of Rep Bob Jenson). "Extirpation" refers to extinction of a species in part of its range. See Michael Allaby, A Dictionary of Ecology 145 (4th ed 2010) ("extirpation" means "[t]he bringing of a species to extinction within a part of its range").
Petitioner generally agrees with the above plain-text reading of the statute, but it argues for a more demanding "technical" meaning of "persistence" found in the Oregon Plan. The difficulty with petitioner's argument is that the Oregon Plan does not define "persistence" or any other similar term, and petitioner does not offer a technical meaning that it believes is contained in the Oregon Plan.
The legislative history of ORS 537.230(2)(c) thus emphasizes that, in using the words "maintain * * * the persistence of fish species," the legislature focused on the longterm preservation or endurance of fish population health in the affected waterway. That understanding is consistent with the plain language of the statute, and, thus, we conclude that the legislative intent expressed in ORS 537.230(2)(c) is that, for extension requests subject to that subsection, the department must find that the undeveloped portions of the permits are subject to conditions
In the final orders, the department, based on ODFW's advice, focused on what streamflow is needed to maintain the listed fish populations in the long term, even though some short-term negative effects may occur to habitat and individual fish in low-flow years. Petitioner, however, takes issue with what it views as the department's overstated focus on long-term fish persistence. That emphasis is improper, petitioner argues, because the statute does not allow for any decline in persistence, even if short term. In conjunction with that argument, petitioner sets out three specific ways in which it asserts that the department's final orders are contrary to law: (1) The conditions placed on the municipal parties' permits "would allow the diversions to cause substantial and prolonged incursions into the persistence flows, impairing habitat and causing some fish to perish." (2) The department did not base the conditions upon ODFW advice or existing data. (3) The department's conditions rely on an "eviction" strategy whereby fish persistence is maintained by causing them to leave the affected reach for better habitat, even though the statute requires persistence to be maintained "in the portions of the waterways affected by water use under the permit." ORS 537.230(2)(c).
We reject each of petitioner's arguments for two overarching reasons. First, as we explain below, each is necessarily dependent upon a conclusion by us that certain of the department findings are not supported by substantial evidence or that its conclusions are not supported by substantial reason. Petitioner recognizes as much because it relies upon a lengthy "substantial evidence and reason" argument in asserting that the department's final orders are contrary to law. Those types of challenges, though, require us to apply different review standards than the "legal error" standard that petitioner urges here. Moreover, as explained above, the department did not apply an incorrect interpretation of ORS 537.230(2)(c). The legislative policy of the statute focuses on long-term fish population health in the affected waterway. It does not express a policy that no habitat may be impaired or that no individual fish may be allowed to perish or leave. The department's interpretation of the statute contained in its final orders — that the department is required to condition the permits to maintain long-term population health of listed fish species — is consistent with the legislature's policy.
We begin our review of the department's final orders with petitioner's first assignment of error. Petitioner asserts that the department's fish-persistence finding is not supported by substantial evidence, because it is not based on existing data or the advice of ODFW, is improperly dependent on unknown future actions, and lacks substantial reason. Under ORS 183.482(8)(c), we are required to set aside or remand the department's final orders if they are not supported by substantial evidence. ORS 536.075(3) (appeal of a final order issued by the department in a contested case is to be conducted according to ORS 183.482, except as otherwise specifically provided).
"Substantial evidence exists to support a finding of fact when the record, viewed as a whole, would permit a reasonable person to make that finding." ORS 183.482(8)(c). As part of our substantial evidence review, "we [also] look at whether the findings provide `substantial reason' to support the legal conclusion reached by the agency." Warkentin v. Employment Dept., 245 Or.App. 128, 134, 261 P.3d 72 (2011) (citing Drew v. PSRB, 322 Or. 491, 500, 909 P.2d 1211 (1996)) ("[A]gencies also are required to demonstrate in their opinions the reasoning that leads the agency from the facts that it has found to the conclusions that it draws from those facts." (Emphases in original.)). Applying that standard of review, we turn to petitioner's contentions.
As a necessary preliminary matter, we first address the 35 additional findings made by the department, which petitioner challenges as unsupported by substantial
Petitioner, however, does make specific challenges to findings 43[59][61], 45[61][63], 46[62][64], 48[64][66], 49[65][67], 63[79][81], 64[80][82], 65[81][83], and 66[82][84] as unsupported by substantial evidence in the record based on some cited record evidence. Having reviewed those findings, in view of the whole record, we conclude that they are supported by substantial evidence. We address other specific additional findings of the department as they pertain to petitioner's more developed arguments below.
Many of petitioner's contentions appear to stem from petitioner's initial premise that the persistence flows identified in the final orders must be met each year and in each season to maintain fish species persistence. Thus, petitioner argues, the failure of the conditions to ensure that flows are met in each season means that the department's fish-persistence finding is unsupported by substantial evidence. However, in its reply brief, petitioner retreats from that position and "agrees [with the municipal parties that] the flows were `intended to function as triggers for determining what actions might be necessary when flows fell below those targets'; the clear problem is that, during summer, they do not trigger anything (including ODFW's intended actions). Outside of summer, they trigger inadequate actions." Upon review of ODFW's advice and the department's orders, we agree with petitioner's refined position that, based on ODFW's advice, the department set the persistence flows as target levels used to trigger actions required by the permit conditions, and not as hard numbers that must be met at all times.
Our task, thus, is to determine (1) whether substantial evidence supports the department's findings regarding the effect on the persistence of the listed fish species when the persistence flows are not being met and (2) whether, in turn, substantial reason supports the department's conclusions that its permit conditions will maintain the persistence of the listed fish species in the affected reach with those effects in mind. With our broad-view task thus defined, we turn to petitioner's specific contentions regarding the persistence flows.
Petitioner's main contention is that substantial evidence does not support the department's findings with regard to the effect of drops below the persistence flows, particularly during historically low-flow months (July 1 to early October), and that substantial reason does not support the department's conclusion that the permit conditions will maintain the persistence of listed fish species because those conditions do not protect persistence flows over the long term. Specifically, petitioner asserts that persistence flows are not protected because (1) the permit conditions do not limit any drops in flow to the "short-term," which is not defined in the
With the exception of finding 38[54][56], petitioner does not identify the specific findings that it challenges as lacking substantial evidence with regard to streamflow. However, the department made the following relevant findings:
(Record citations omitted.)
Based on its additional findings, the department explained that ODFW recognized that the listed fish species have persisted under current conditions where flows are not always met from July to October and that "ODFW has stated that the target flows are what are required on a long-term, rather than short-term basis for persistence of listed fish species. * * * ODFW believes that the fish persistence conditions are sufficient to mitigate for the additional diversions contemplated under the permits." (Emphasis in original.) The department also stated that there was no evidence in the record that the potential movement of fish from the lower reach or the loss of individual fish in the summer months "poses a threat to the persistence of any listed fish species." (Emphasis in original.) The department thus concluded that the permits, as conditioned, maintained the persistence of listed fish species in the affected waterway.
Our main difficulty with petitioner's omnibus substantial evidence challenge to the department's findings is that petitioner does not identify problems with particular findings and does not engage with the administrative record as a whole, relying instead upon its own expert, Rhodes. "In cases in which expert witnesses testify on both sides of a contested issue, our function is not to weigh the evidence anew to determine which we find more persuasive; it is to determine only whether a reasonable person could weigh the evidence as the finder of fact did." Kniss v. PERB, 184 Or.App. 47, 52, 55 P.3d 526 (2002) (citing Armstrong v. Asten-Hill Co., 90 Or.App. 200, 206, 752 P.2d 312 (1988)). Based on review of the record as a whole, we conclude that the department could reasonably weigh the expert evidence as it did and that the department's findings set forth above are supported by substantial evidence, with the exception of finding 38[54][56].
With respect to finding 38[54][56], there is not substantial evidence in the record as to what a "short-term drop" is in terms of fish persistence or why the flows predicted by Rhodes, which are not identified in the order, fall within that category. The only evidence pointed to in the record by respondents is testimony from ODFW employee Kepler, which, with respect to that finding, reduces to his bare statement that "Mr. Rhodes' testimony does not provide information that would alter [ODFW's] assessment." Bare conclusions by agency experts
We also agree with petitioner that the department's ultimate determination that the permits, as conditioned, will maintain the persistence of listed fish species lacks substantial reason because the department failed to explain how its streamflow findings and the imposed conditions connect, so as to reach that determination. We turn now to that argument.
To understand the problem with the department's ultimate determination, it is necessary for us to first describe what the permit conditions both do and fail to do to protect the persistence of fish species. As set forth above, 268 Or.App. at 202-04, 342 P.3d at 721-22, the department placed three conditions on each of the municipal parties' permits. The first condition merely adopted ODFW's recommended persistence flows and designated the location and gage at which those flows would be measured. The second condition is the "meeting condition," which provides:
Petitioner points out, and respondents do not dispute, that the meeting condition "does not actually require any water to be released from Timothy Lake and specifies that any non-Timothy Lake actions are strictly voluntary." The department found that Timothy Lake releases may not be available every year or in an amount that will meet persistence flows. ODFW's advice focused on using releases in the fall months to provide steady flow to protect Chinook spawning and migration, and ODFW would only want releases during the summer if available and if it would not threaten steady flows in the fall.
The third condition is the "curtailment condition," which provides, in relevant part: "[f]rom the first Monday in September through June 30 the maximum total amount of the undeveloped portion of the [permit] that can legally be diverted shall be reduced in proportion to the amount by which the flows shown in Table 1 are not met[.]" As found by the department, the municipal parties are not subject to curtailment of diversions of the undeveloped portions of their permits during the summer, when persistence flows are anticipated to be missed. And, as pointed out by petitioner, and undisputed by respondents, the curtailment condition does not ensure that persistence flow levels will be met or that actual diversions will be reduced, because the proportional curtailment may only require the municipal party to not divert an amount of water already not being diverted under the undeveloped portion of the permit.
Based on the record, petitioner is correct that the conditions do not ensure that persistence flows will ever be met during the summer months, because curtailment by the municipal parties is not required and augmentation flows are typically not to be used
Petitioner essentially argues that those circumstances necessarily mean that the department's determination lacks both substantial evidence and substantial reason because the department also found (finding # 35) that "ODFW's recommended streamflows are required on a long-term basis to maintain the persistence of listed fish species in the lower 3.1 miles of the Clackamas River." In sum, petitioner argues that "[the department] fails to explain how permit conditions with no mechanism to protect persistence flows from July 1 until early September (finding # 59), and which only require a modest proportional reduction for the remainder of the year (finding # 58), will maintain persistence flows in the long-term as the [final order] finds is necessary to maintain fish persistence (finding # 35)." (Emphasis in original.)
Respondents provide a three-part response to that argument. They assert that the department and ODFW found that any dips below the persistence flows would not threaten the persistence of the listed fish species. They also contend that petitioner's expert's opinion — that missed flows would occur more often — was based on a flawed analysis and was rejected by the department. Respondents also argue that the department did fully explain how the conditions will maintain persistence flows, quoting the following passage from the amended proposed orders:
(Record citations omitted; emphasis in original.)
We agree that the above paragraph is the best explanation provided by the department to connect its findings to its conclusion that it has satisfied ORS 537.230(2)(c) in relation to the substantial reason problem identified by petitioner. However, we conclude that it is not sufficient.
As set out above, the department made certain crucial findings about the persistence flows:
Thus, the department emphasized that the short-term failure to meet of persistence flows would not prevent the persistence of the listed fish species, but that meeting those
The department's orders also do not explain how the municipal parties' diversions of the undeveloped portions of their permits as allowed under the conditions will not contribute to a long-term failure to meet the persistence flows. A reasoned explanation is necessary because the plain wording of the permit conditions allows the municipal parties to divert (at least part, if not all of) the undeveloped portion of their permits regardless of whether persistence flows are met and regardless of how long the failure to meet those flows persists. The department failed to connect the dots between its finding of what is necessary to maintain fish persistence — long-term meeting of persistence flows — with how the conditions ensure that the diversion of the undeveloped portions of the municipal parties' permits do not contribute to the long-term failure to meet persistence flows.
That missing connection between the what and the how is particularly needed here because the meeting condition, on which the department (based on ODFW's advice) appears to have particularly relied as the means by which fish persistence will be maintained, is not a condition placed on the use of the undeveloped portion of the municipal parties' permits. Although the department may have been hopeful, or even confident, that the municipal parties and ODFW will agree on a strategy each and every year to ensure that diversion of the municipal parties' undeveloped portions of their permits do not prevent persistence flows from being met on a long-term basis, the statute requires more. The statute requires the department to find that "the undeveloped portion of the permit is conditioned to maintain * * * the persistence of [listed] fish species." ORS 537.230(2)(c) (emphasis added). As written, the department's meeting condition is not tied to the municipal parties' diversion of the undeveloped portions of their permits and, indeed, prohibits the municipal parties from being subjected to a reduction in their diversions as part of the annual strategy, absent their voluntary agreement to do so. The department's findings regarding ODFW's intent with regard to the meeting condition cannot relieve the department of its statutory obligation to find that the undeveloped portions of the municipal parties' permits are conditioned, i.e., their use is made conditional, on maintaining fish persistence.
The explanation provided by the department to support its conclusion that the permit conditions meet the statutory standard under ORS 537.230(2)(c) is that, because ODFW "concurs" (with no other explanation) with the department's finding that the conditions maintain fish persistence, then, therefore, the conditions maintain fish persistence.
In sum, we conclude that the department's finding 38[54][56] lacks substantial evidence and that the department's determination that ORS 537.230(2)(c) has been satisfied lacks substantial evidence and substantial reason. Because our conclusion requires the department to revisit its fish-persistence findings and conditions, we do not address petitioner's contentions that the conditions are not consistent with ODFW's advice and improperly rely on future conditions.
Petitioner next challenges the department's modification of the ALJ's recommended annual-meeting condition, asserting that it was an erroneous modification of a finding of historical fact. That challenge is governed by ORS 183.650(3) and (4) (2007), amended by, Or. Laws 2009, ch. 866, § 7,
We have explained that, in reviewing de novo under subsection (4), "we apply a `preponderance of evidence' standard." Corcoran v. Board of Nursing, 197 Or.App. 517, 525, 107 P.3d 627 (2005). In invoking our de novo review function, the petitioner "must specifically identify each challenged modification of a finding of historical fact and explain why that modification was erroneous as unsupported by a preponderance of the evidence." Id. at 526, 107 P.3d 627 (emphases in original). If the petitioner fails to undertake that exercise, we will not engage in de novo review of the challenged modified fact. See Weldon v. Bd. of Lic. Pro. Counselors and Therapists, 266 Or.App. 52, 64, 337 P.3d 911 (2014) (so explaining under current version of ORS 183.650).
We begin with a detailed account of petitioner's assertions, because respondents argue that petitioner has not sufficiently heeded our instruction in Corcoran to invoke our de novo review. Petitioner asserts that "the ALJ made several findings of fact regarding what ODFW's advice required from the annual meetings and where the permit conditions failed to incorporate ODFW's advice." Specifically, petitioner identifies the following findings of historical fact made by the ALJ:
(Record citations omitted; brackets and emphasis in original.)
Petitioner then asserts that the department modified those findings with its additional finding of fact number 52[68][70], which provides:
(Emphasis added by petitioner.) Petitioner argues that that modification is not supported by the record because the testimony of an ODFW employee, Kepler, demonstrates that "ODFW intended that the outcome of the annual meetings would require more than voluntary water reduction by the permit holders if persistence flows were not being met during the summer."
We cannot agree with respondents that petitioner has not heeded our instruction in Corcoran. Petitioner has sufficiently identified the historical fact that it alleges the department modified — that ODFW intended that the municipal parties would be required to accede to ODFW's fish-persistence standards if agreement cannot be reached at the annual meeting — and explained, with record citations, why it believes the modification is not supported by a preponderance of evidence in the record.
Consistent with that discussion, the ALJ concluded its proposed order with the recommendation that the department modify its PFOs to "include a provision addressing how to resolve situations where ODFW and the municipality cannot agree on all factors at the annual meeting." Nothing in the sections of the proposed order to which petitioner points contains a finding of historical fact of ODFWs intent with regard to municipal parties acceding to ODFW in the event of disagreement on issues not related to Timothy Lake releases. We also note, in response to certain arguments petitioner made on reply and in oral argument on this point, that ODFWs advice to the department also did not contain any such requirement. See 268 Or.App. at 196-98, 342 P.3d at 717-19 (quoting ODFWs advice).
Because petitioner has not identified a finding of historical fact of the ALJ to which ORS 183.650(3) (2007) applies, we are not permitted to undertake de novo review as provided in ORS 183.650(4) (2007).
Finally, petitioner makes two separate procedural challenges to the department's final orders. We review procedural challenges to determine if "the fairness of the proceedings or the correctness of the action may have been impaired by a material error in procedure or a failure to follow prescribed procedure, including a failure by the presiding officer to comply with the requirements of ORS 183.417(8)." ORS 183.482(7). ORS 183.417(8) requires the ALJ to "ensure that the record developed at the hearing shows a full and fair inquiry into the facts necessary for consideration of all issues properly before the presiding officer in the case and the correct application of the law to those facts."
Petitioner's first procedural challenge is difficult to deconstruct, but we understand petitioner to argue that the ALJ violated ORS 183.417(8) by denying petitioner the opportunity to have a neutral fact finder (the ALJ) make findings of fact with regard to its fish-persistence evidence. Petitioner reaches that conclusion through two steps: First, the ALJ accepted an "instruction" from the department that its role in determining the department's compliance with the fish-persistence requirement in ORS 537.230(2)(c) was limited to determining if the department's findings were consistent with ODFW's advice and, thus, the ALJ did not make findings on petitioner's fish-persistence evidence. Second, the department then made its own independent findings on petitioner's fish-persistence evidence after concluding in the amended proposed orders that the ALJ's construction of ORS 537.230(2)(c) was not correct, thus circumventing possible de novo
We reject petitioner's assertion. Petitioner's argument has nothing to do with whether the ALJ failed to ensure a full and fair development of the factual record necessary for a decision in these cases, which is what ORS 183.417(8) requires. Rather, petitioner's argument is solely directed at its disagreement with the ALJ's legal conclusion of what ORS 537.230(2)(c) required of the department, which affected the substance of the ALJ's findings. The department was permitted to make substantial modifications to the department's proposed order — such as correcting the ALJ's incorrect legal conclusion and making additional necessary findings of fact — as long as those modifications were identified and explained. ORS 183.650(2). There is nothing in the record that indicates that the ALJ was improperly accepting "instruction" from the department to use an improper construction of the statute with the aim of preventing consideration of petitioner's evidence. The ALJ explained in the proposed orders that his legal conclusion was based on his reading of the plain wording of the statute and what it required the department to do — that the department "shall" base its findings on ODFW's advice. Also, except as asserted in petitioner's second procedural challenge, petitioner does not point to any procedural error committed by the ALJ or the department.
Petitioner's second challenge contains both a procedural and evidentiary component and pertains to the ALJ's and the department's handling of its climate-change exhibits and the DEQ letter exhibits. As discussed in more detail above, 268 Or.App. at 199-200, 342 P.3d at 719-20, the ALJ excluded those exhibits at the hearing as irrelevant, and petitioner made offers of proof of those exhibits. In its amended proposed orders, the department concluded that the climate-change exhibits were relevant and made findings of fact with respect to them, but adhered to the ALJ's exclusion of the DEQ letters. On judicial review, petitioner argues that (1) the department abused its discretion in admitting petitioner's climate-change exhibits without first remanding to the ALJ for further hearings as required by OAR 137-003-0655(5),
With regard to the asserted procedural error, even if the department violated OAR 137-003-0655(5), which we do not decide, petitioner makes no effort to explain why that error necessitates a remand to the department, such as identifying how the record would have been developed differently absent the error. We may remand an agency final order for procedural error only if the agency's failure to follow procedure impaired "the fairness of the proceedings or the correctness of the action." ORS 183.482(7). Petitioner has not made that showing. See Gleason v. Oregon Racing Comm., 233 Or.App. 164, 169, 225 P.3d 123 (2010) ("[I]n the absence of a showing that the delay compromised petitioner's ability to have a fair hearing, we conclude that the procedural deficiency does not require a reversal of the commission's order.").
Petitioner's challenge to the exclusion of the DEQ letters fails for the same reason. We may reverse based on evidentiary error only if the error substantially prejudiced petitioner's rights. ORS 183.450(1) ("[E]rroneous rulings on evidence shall not preclude agency action on the record unless shown to have substantially prejudiced the rights of a party."); Adams v. Board of Clinical Social Workers, 201 Or.App. 500, 507, 119 P.3d 260, rev. den., 339 Or. 700, 127 P.3d 1202 (2005) ("[W]e conclude that any error in excluding the evidence did not substantially prejudice petitioner and is not, for that reason, a basis
In sum, we conclude that finding number 38[54][56] lacks substantial evidence and that the department's ultimate determination that the permits, as conditioned, maintain the persistence of listed fish species lacks both substantial evidence and substantial reason. We reject all of petitioner's remaining challenges to the final orders. Accordingly, we reverse and remand each of the final orders in these three cases for further consideration by the department.
In A148870, reversed and remanded.
In A148872, reversed and remanded.
In A148874, reversed and remanded.
(Record citations and footnotes omitted; emphasis added.)
