FAX TRANSMISSION COVER SHEET

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1 an. zs. 2U 4 I4:22 No P. 1/8 OREGON TAX COURT CO ~VUH Tdx a ~ 9r~ OF' APF'G~ 1163 State Street Salem, Oregon Tel Fax:(503) FAX TRANSMISSION COVER SHEET TO: Thane Tienson. Gregory Mowe. Stephanie Parent. Paul Conable FAX NO: (503) (3) {971) :(503) FROM: I-Ion. Henry C. Breithaupt DATE: January 8, 2014 SUBJECT: Kramer & Prager v City of Lake Oswego et al., CV NO. PAGES: (including this page) 8 This Communication May Consist of Information Intended Only for the Use of the Individual or Entity Named Above. If the Reader of this Message is Not the Intended Recipient, You Are Hereby Notified That Any Dissemination, Distribution, or Copying of this Communication Is Strictly Prohibited, If You Receive This Communication In Error, Please Notify Us By Telephone and Return the Communication To Us at the Address Listed Above Via the U.S. Postal Service. Thank You. If you do not receive the number of pages indicated,please contact our office immediately at (503 )

2 Jan. d :22 P. 2/8 HENRY C. BREITHAUPT Judge Pro Tern Fax: January 8, 2014 Thane W. Tienson Stephanie M. Parent Landye Bennett Blumstein LLP Oregon Department of Justice 1300 SW 5th Ave Ste SW 5th Ave Ste 410 Portland OR Portland OR Gregory R. Mowe Paul W. Conable Stoel Rives LLP Tonkon Torp LLP 900 SW 5th Ave Ste SW 5th Ave Ste 1600 Portland OR Portland OR Dear Counsel: Re: Kramer & Prager v. City of Lake Oswego et al., No. CV This matter is before the court on a motion for partial summary judgment of plaintiffs, a motion to dismiss filed by defendant-intervenor Lake Oswego Corporation (LOC)and motions for summary judgment filed by LOC, defendant the City of Lake Oswego (City), and defendant the State of Oregon (State). The briefing and argument on these motions occurred in two stages. In the first stage, matters addressed in the complaint as it stood before the final permitted amendment were addressed and the focus was on the provisions of Resolution of the City. In the second stage, the major focus was on whether the rules of the City governing the swim park violated Article I, section 20 of the Oregon Constitution. I. STANDING AS TO RESOLUTION LOC raises in its motion to dismiss the issue of the standing of the plaintiffs to seek the judicial remedies they request. This may also be considered an argument that there is no justiciable controversy presented by plaintiffs. The Oregon Supreme Court has made it clear that standing is to be determined by reference to the statute pursuant to which the plaintiffs seek relief. In the case of the declaratory judgment statute, the statute speaks of an ordinance or law affecting the "rights, status or legal relations." Morgan v Sisters School Dist. No. 6, 353 Or 189, 190, 301 P 3d 419 (2013). The relief sought most also have some practical effect. Id Kramer & Prager v. City of Lake Oswego et al.. No. CV Page I of 7

3 an. U. 2U 14 14:11 No P. 3/8 HENRY C. BREITHAUPT Judge Pro Tern Fax: It appears to the court that the allegations of the plaintiffs here identify a right or status that is affected by Resolution namely their right to cross the property of the City to access the lake. However, in the case of the type of injunctive relief that the plaintiffs seek, relief that is not governed by a specific statute, plaintiffs must also show that they are injured by Resolution "in some special sense that goes beyond the injury the plaintiffs would expect as a member of the general public." Eckles v. State of Oregon, 306 Or 380, 386, 760 P2d 846 (1988). Morgan cites Eckles with approval. Here, Resolution prevents all others, just as it prevents plaintiffs, from using the property of the City as an access to the lake. The injunctive relief sought by the plaintiffs would not appear to address an injury to them that is in some special sense an injury that would go beyond the injury the plaintiffs would experience as members of the general public. The court is therefore inclined to grant the motion to dismiss insofar as it addresses the challenges to Resolution The law of justiciability and standing is, however, sufficiently difficult, and the probability of a misunderstanding by the court sufficiently high, that the court will proceed to address the issue of standing as to the swim park rules and the availability of relief to the plaintiffs on the merits. II. STANDING AS TO SWIM PARK RULES. The challenge as to the swim park rules is that they violate Article I, section 20 of the Oregon Constitution. Plaintiff Prager has no standing to raise this claim as he is a resident of the City. Plaintiff Kramer is not a resident of the City and does have standing to raise the question of the constitutionality of the rules. The City has objected that plaintiff Kramer has not alleged that he wishes to swim. In an abundance of caution, the court will address the challenges raised by plaintiff Kramer on the merits. III. VALIDITY OF SWIM PARK RULES. Pursuant to the order of Judge Herndon, the validity of the restrictions, subject to which the City took the upland property that is part of the swim park, is not at issue. The only challenge to the rules restricting use of the park to residents arises under Article I section 20 of the Oregon Constitution. As the parties have agreed, the analysis to be undertaken is the same as that applicable to challenges under the Equal Protection clause of the 14 i1' Amendment to the Constitution of the United States. Kramer & Prager v. City of Lake Osweg o et a1.. No. CV Page 2 of 7

4 Jan :23 No P. 4/8 HENRY C. BREITHAUPT Judge Pro Tern Fax: Plaintiff Kramer asserts that strict scrutiny is mandated as to these rules as they impact on a fundamental interest related to the rights of the public in the waters of the state and the land underlying such waters. The City and LOC assert that only a rational basis level of scrutiny is warranted. It would appear that geographic classifications warrant only rational basis review. Seto v. Tri-County Metropolitan Transp. Dist. of Oregon, 311 Or 456, 814 P2d 1060 (1991); Morsman v. city of Madras, 203 Or App 546, 126 P3d 6 (2006). Under such review the rules of the City pass muster with no difficulty. However, even if Plaintiff Kramer is correct as to the level of scrutiny required, there is no violation of the Oregon constitution. The City has a compelling governmental interest in maintaining for its residents the availability of the swim park. Indeed, plaintiff Kramer acknowledges that access to the waters of the lake is a very important interest. The restrictions of the City are also narrowly tailored to achieve the compelling governmental interest. The restrictions do not go beyond the terms of the covenants and restrictions to which ownership by the City is subject. Although plaintiff Kramer disagrees with the restrictive covenants that burden the land acquired by the city, they are valid. Violation of those restrictions could lead to a loss of access to the lake for anyone. Compliance by the City with the restrictive covenants is not a violation of the Oregon Constitution. IV. VALIDITY OF RESOLUTION Under its charter, the City has the authority needed to promulgate Resolution The possible limits on an exercise of that authority must come from valid state laws, the Oregon Constitution, valid federal statutes or the federal constitution. Plaintiffs have identified no state statute that purports to limit the City in its exercise of its home rule powers through adoption of Resolution Plaintiffs have argued that Article I section 20 of the Oregon Constitution applies and is violated by Resolution The Resolution, however, applies to all persons and classes of persons and cannot, therefore, constitute a violation of Article I section 20 of the Oregon Constitution. Plaintiffs do not argue that any federal statute or provision of the federal constitution limits the exercise of the City in the adoption of Resolution To the extent that the Oregon Admissions Act imposes any limitation in respect of the Public Trust Doctrine, that limitation is imposed on the State as trustee and not the City. Krasner & Prager y. City of Lake Oswego et al., No. CV Page 3 of 7

5 Jan. d :23 No P. 5/8 HENRY C. BREITHAUPT Judge Pro Tern Fax: Plaintiffs appear to argue that somehow the Public Trust Doctrine applies to the City and makes its adoption of Resolution invalid. However, under the Public Trust Doctrine there is only one trustee, and that is the State. Plaintiffs identify no statute of the State that would prevent the City from adopting or enforcing Resolution This is in stark contrast to the situation addressed in Morse v Oregon Div. of State Lands, 34 Or App 853, 581 P2d 520 reh'g den, 35 Or App 665, 583 P2d 40 (1978), nff'd 285 Or 197, 590 P2d 709 (1979), a case in which the validity of a regulation was tested against the provisions of a statute adopted by the State as trustee. And, it is worth noting that in Morse the question was not action on or access to the upland but rather filling of submerged or submersible land. Plaintiffs fare no better in their assertion that the Public Use Doctrine is a basis for challenging the actions of the City. The Public Use Doctrine regulates the actions of persons already on the water to which the doctrine applies. Although the doctrine may allow temporary touching or access to uplands where necessity requires it, the doctrine cannot serve as a basis for preventing upland owners from restricting access to the water. Lebanon Lumber Co. v. Leonard, 68 Or 147, 136 P 891 (1913); Op Atty Gen No (April 21, 2005). The necessity element cannot be read as requiring an upland owner to provide regular access across uplands to the water. The cases speak not of access to the water by way of the land, but rather of access front the water to land, where such access to the land is necessary to make meaningful the use of the water. In this case plaintiffs do not benefit from the Public Use Doctrine in their effort to force the City to allow access from the land to the water. V. DUTY OF THE STATE TO TAKE ACTION AS TO RESOLUTION Plaintiffs argue that under the Public Trust Doctrine the State has a duty to take action in respect of Resolution 12-12, and otherwise, so as to allow plaintiffs and the public to access the lake across the land owned by the City and subject to Resolution With respect to the invocation by the plaintiffs of the Public Trust Doctrine, it is important to observe that the doctrine appears to relate only to the beds of streams and lakes owned by the State and the waters above them. For purposes of this opinion it is assumed, without any decision being made on the subject, that the State owns the subsurface of Lake Oswego and Lakewood Bay. While the Public Trust Doctrine clearly relates to the subsurface of navigable waters, and again it is assumed, but not decided, that the waters of Lake Oswego and Lakewood Bay are navigable, it does not speak to the rights or obligations of a state in respect of upland or riparian property owned by others. And, as to the land controlled by the state under the doctrine, "it has been long established that the individual States have the authority to define the limits of the lands held in public trust and to recognize private rights in such lands as they see fit." Phillips Kramer & Prager v. City of Lake Oswego et a1.. No. CV Page4of7

6 Jan :24 No.0556 P. 6/8 HENRY C. BREITHAUPT Judge Pro Tern Fax: Petroleum Co. v. Mississippi, 484 US 469, 475, 108 S Ct 791, 98 L Ed 2d 877 (1988) (quoting from Shively v. Bow/by, 152 U.S. 1, 26 (1894)). The court is not aware of a case in which a court has seen fit to order a state to take action against an upland owner to provide access to lands and water to which the state has title. The rights and obligations of the State as to such upland could not be greater than they are as to the subsurface. The court will therefore consider the nature and extent of the duties of the state as to the subsurface to determine whether a court could order the State to take action as to such subsurface. If requiring action as to subsurface is not appropriate, neither could any requirement of action as to upland be appropriate. As mentioned above, the State is the trustee tinder the Public Trust Doctrine. The Public Trust Doctrine is a matter of state law and does not depend on the federal constitution. PPL Montana, LLC v. Montana, US, 132 SCt 1215, 182 L Ed 2d 77 (2012). Under basic republican theory, the State acts through the legislature in the first instance. This was recognized in all of the opinions in Morse. Provisions in the Oregon Constitution relating to the State Land Board, Oregon statutes and the creation of state agencies charged with the implementation of those statutes indicate that questions regarding the Public Trust Doctrine have not, in Oregon, been left for development by the courts of a common law doctrine. The actions of the State as trustee must be taken by statute. The plaintiffs have not, however, pointed to a statute pursuant to which an agency of the state is required to take the action they request this court order. If and when the State has acted legislatively, the actions of agencies charged with application of statutes may be challenged in court, as they were in Morse. Similarly, actions of subsidiary governments or other persons could also be subject to challenge. However, each state is the trustee for its citizens. Accordingly, actions and decisions from other states are of limited usefulness in determining how the State is to be judged with respect to its role as trustee. Indeed, this court is of the opinion that the State is not subject to being "judged" in a court, except perhaps when action has been taken that is arguably inconsistent with the Public Trust Doctrine as developed by legislative action. This is exactly what occurred in the Morse case. No such action by the State or any of its agencies has occurred here and the court finds the position of the State regarding positive duties--which no court in Oregon has found a basis on which to impose a positive duty to act--to be well taken, In this particular case the duty the plaintiffs seek to impose is for the state to take action to insure that they have access to the lake across upland property not owned by the State and burdened by covenants and restrictions limiting access to the lake. Krasner & Prager v. City of Lake Oswego et al., No. CV Page 5 of 7

7 Jan :25 No.0556 P. 7/8 HENRY C. BREITHAUPT judge Pro Tern Fax: There are important fundamental reasons for the court to stay its hand in imposing on the State a duty to act in this and similar cases--that is, cases where public enjoyment of water which is or may be owned by the State or above land owned by the State involves the necessity to pass over property not owned by the State. First, there appear to be no precedents that support requiring the State to take action in respect of upland property not owned by it. Second, the role of the State as trustee involves a republican function. Decisions by the representatives of the people are to be made. Accordingly it is to be discharged, in the first instance, by the political branches, the legislature and governor, not the courts. Decisions regarding water and land resources of the State are obviously best made at the statewide level. And with limited resources and statewide problems or issues regarding the Public Trust, decisions about whether to take action, and, if so, what action to take, involves the balancing of costs and benefits that is allocated to the political branches, in the first instance. The courts have recognized this in other cases of great importance. In Hughes v. State of Oregon, 314 Or 1, 33 n 36, 838 P 2d 1018 (1992) the Court commented that even if the court had inherent authority to fashion a remedy for the breach of a statutory contract relating to public employment retirement benefits, it would decline to do so as the legislature was the most appropriate branch of government in the first instance to choose among the available remedies. Indeed, this case presents, potentially, very difficult balancing of public costs and public benefits. The type of action that the plaintiffs seek to have the court order could well violate the covenants and restrictions that LOC or its predecessor put in place to protect what it considered to be important private concerns. Such concerns may, and often do, have to yield in the face of overriding public concerns. I-Iowever, the adjustment of the two sets of concerns and the potential for any adjustment to involve expenditure of funds of the State, in the City and other communities in the state, is for the legislature and not the courts. The State may act by legislation in the creation or expansion of the duties of administrative agencies to implement such legislation. There may already be agencies authorized to consider condemnation of property interests where such acquisition by the state is considered appropriate in connection with the Public Trust Doctrine. In each such forum and at each of those steps, plaintiffs and others may bring their concerns to those involved in the formulation of policy for the State. Those are the proper routes to follow either as to application of the Public Trust Doctrine or other action to acquire access for the public to Lake Oswego. The reasoning of this court as to the Public Trust Doctrine applies with equal or greater force as to the Public Use Doctrine. That doctrine is no broader in scope than the Public Trust Doctrine and may be narrower. Public Use Doctrine cases have generally involved the Kramer & Prager v. City of Lake Oswego et al. No. CV Page 6 of 7

8 Jan :26 No P. 8/8 HENRY C. BREITHAUPT Judge Pro Tern Fax: adjustment of disputes between or among private persons with competing navigational or recreational rights or, in some cases such as Weise v. Smith, 3 Or 445 (1869), between users of water and upland owners. They have not involved or led to the imposition of duties on the trustee under the Public Trust Doctrine. For the foregoing reasons, the motion to dismiss is denied, the motion for partial summary judgment of plaintiffs is denied and the motions for summary judgment of LOC, the City and the State are granted. Counsel for the City is directed to submit an appropriate form of order and judgment. Very Truly Yours, Henry C. Breitha pt Judge Kramer Prager v. City of Lake o et al. No. CV Page 7 of 7