Northwest Business Litigation

Washington counties can't use eminent domain power to rehabilitate salmon habitat

Yesterday in Cowlitz County v. Martin, the Washington Court of Appeals, Division Two, held that Washington's Salmon Recovery Act ("SRA"), RCW 77.85 et seq., does not authorize the State or its entities to condemn private property for salmon habitat restoration.  The Court not only found there was nothing in the SRA granting a county, city or tribal government authority to condemn private property, but that there was significant indication to the contrary in the statute.

The Court also found the condemnation could not proceed under RCW 8.08 et seq., the statute that confers the power of eminent domain to Washington counties.  Following the principal that preference should give given to a more specific and more recent statute that addresses the same issue as an older, broader statute, the Court found the SRA covered the issue of salmon fish passage restoration and protection and that the Legislature clearly elected not to grant eminent domain power to protect this public interest.

Court of Appeals applies "frustration of purpose" doctrine to energy contract

The failed deregulation of the California energy markets in the late 1990s continues to have repercussions in the courts.  Yesterday the Oregon Court of Appeals held that the manipulation of those markets, resulting in skyrocketing prices in 2000 and 2001, may have been sufficiently severe to void a contract between an electrical utility and its customer in Oregon.  In Wah Chang v. Pacificorp, the court held that Wah Chang, an electricity customer of Pacificorp, brought forward evidence "that California's energy markets had been subjected to manipulation so egregious and pervasive, and so unprecedented in its scope and magnitude, as to be beyond the parties' reasonable contemplation" when they entered into their contract in 1997.  This evidence is sufficient to proceed to trial on Wah Chang's theory that the rarely-used doctrine of "frustration of purpose" voided its obligations under the contract.

Court of Appeals holds that protected areas in the Columbia River Gorge are exempt from Measure 37

The Oregon Court of Appeals today issued an opinion interpreting Measure 37, holding that land use regulations restricting development within the Columbia River Gorge National Scenic Area are not subject to the measure's compensation scheme.  Measure 37 (ORS 197.352) requires governments to compensate land owners for loss of value caused by land use regulations, or to waive those regulations.  Measure 37 expressly does not apply to regulations "required to comply with federal law."  In Columbia River Gorge Commission v. Hood River County, the court held that counties' land use ordinances implementing the federal Columbia River Gorge National Scenic Area Act fit within that exemption.

Denying a Measure 37 waiver requires notice and hearing, Oregon Court of Appeals holds

Measure 37 meets the U.S. Constitution in a case decided by the Oregon Court of Appeals last week.  In Corey v. Department of Land Conservation and Development, the court addressed a limited question:  did it have jurisdiction to review an agency's refusal to waive certain land use regulations in response to a Measure 37 claim?  But the answer to the question required a detour into the law of governmentally-created property interests protected by the Due Process Clause of the Fourteenth Amendment.

Measure 37, codified at ORS 197.352, requires, under defined circumstances, that the government either compensate property owners for loss of value caused by land use regulations, or waive those regulations.  In response to the Corey's Measure 37 claim, the DLCD waived certain regulations but concluded that it was not required to waive others. 

Corey sought review in the Court of Appeals of the refusal to waive.  According to the court, it has jurisdiction if the DLCD proceeding was a contested case under the Administrative Procedures Act.  And the matter was a contested case if, for example, the claimant had a protected property interest would could be taken by the government only after notice and a hearing.  After reviewing U.S. Supreme Court precedent on constitutionally-protected interests, the court concluded that the DLCD created an entitlement to benefits when it accepted the Measure 37 claim, and that Corey was entitled to notice and a meaningful hearing before DLCD could refuse to waive any of the regulations.  Accordingly, the Court of Appeals had jurisdiction to review the matter as a contested case.

Dreyer vs. PGE

In 1993 PGE decided to close its Trojan nuclear power plant.  Since then, the company has been mired in both litigation and administrative proceedings over whether its customers or its shareholders have to bear the consequences of that decision.

Yesterday, the Oregon Supreme Court issued a decision which at first blush appears to be a victory for PGE's customers and a defeat for its shareholders.  In Dreyer v. PGE the Supreme Court refused to issue an order directing Marion County Circuit Court Judge Lipscomb to dismiss a customer class action for damages against PGE.  The suit had alleged that PGE had illegally charged customers for a return on PGE's investment in Trojan in violation of the decision by the Oregon Court of Appeals in Citizens' Utility Board v. PUC, 154 Or App 702, 962 P2d 744 (1998).  By refusing to dismiss this customer class action, the Supreme Court rejected PGE's argument that ORS 756.518, as interpreted by the Circuit Court, was inconsistent with the "filed rate doctrine."

The Supreme Court did, however, save PGE--at least for now--by not remanding the case to the Circuit Court so that the litigation could be brought to trial.  Rather, the Supreme Court found that the Circuit Court should have abated the case pending completion of the PUC's administrative proceeding on this same controversy.

Thus, the ball is now in the PUC's court to try to determine who has to bear the costs of closing Trojan.  Once the PUC determination has been made, there is no doubt the parties will be back in court on these same issues.