Court Opinion

ID: 9911696
Source: CourtListenerOpinion
Date Created: 2023-12-20 17:08:57.710884+00
Date Added: 2024-06-11T12:53:48.517066
License: Public Domain

648                 December 20, 2023            No. 666

          IN THE COURT OF APPEALS OF THE
                  STATE OF OREGON

        NORTHWEST NATURAL GAS COMPANY,
                     Avista Corporation,
           and Cascade Natural Gas Corporation,
                         Petitioners,
                              v.
      ENVIRONMENTAL QUALITY COMMISSION,
                         Respondent,
                            and,
      NATURAL RESOURCES DEFENSE COUNCIL,
                   Intervenor-Respondent,
                            and,
                     BEYOND TOXICS,
                     Climate Solutions,
               Environmental Defense Fund,
      Oregon Business Alliance for Climate-dba Oregon
                   Business For Climate,
            and Oregon Environmental Council,
                 Intervenors-Respondents.
                      A178216 (Control)
        OREGON FARM BUREAU FEDERATION;
          Oregon Business & Industry Association;
           Oregon Manufacturers and Commerce;
          Alliance of Western Energy Consumers;
              Associated Oregon Loggers, Inc.;
           Northwest Pulp and Paper Association;
              Oregon Association of Nurseries;
           Oregon Forest And Industries Council;
            Oregon Trucking Associations, Inc.;
            Western Wood Preservers Institute;
                Otley Land and Cattle, LLC;
                 and Space Age Fuel, Inc.,
                         Petitioners,
      NATIONAL FEDERATION OF INDEPENDENT
                        BUSINESS,
                    Intervenor-Petitioner,
                              v.
Cite as 329 Or App 648 (2023)                           649

    ENVIRONMENTAL QUALITY COMMISSION,
                  Respondent.
                    A178217
   WESTERN STATES PETROLEUM ASSOCIATION,
                   Petitioner,
                        v.
    ENVIRONMENTAL QUALITY COMMISSION,
                  Respondent.
        Environmental Quality Commission
                    A178218

   Argued and submitted September 29, 2023.
   Megan H. Berge, California, argued the cause for petition-
ers Northwest Natural Gas Company, Avista Corporation,
and Cascade Natural Gas Corporation. Also on the briefs
were Clifford S. Davidson, Drew L. Eyman, and Snell &
Wilmer LLP; and Sterling Marchand, Scott Novak, and
Baker Botts L.L.P., California.
   Rachel C. Lee argued the cause for petitioners Oregon
Farm Bureau Federation, Oregon Business & Industry
Association, Oregon Manufacturers and Commerce, Alliance
of Western Energy Consumers, Associated Oregon Loggers,
Inc., Northwest Pulp and Paper Association, Oregon
Association of Nurseries, Oregon Forest and Industries
Council, Oregon Trucking Associations, Inc., Western Wood
Preservers Institute, Otley Land and Cattle, LLC, and
Space Age Fuel, Inc. Also on the briefs were Thomas R.
Wood, Geoffrey B. Tichenor, and Stoel Rives LLP.
   Steven G. Liday argued the cause for petitioner Western
States Petroleum Association. Also on the briefs were Joshua
M. Sasaki, Ivan Resendiz Gutierrez, Katelyn J. Fulton, and
Miller Nash LLP.
   Carson L. Whitehead, Assistant Attorney General,
argued the cause for respondent Environmental Quality
Commission. Also on the brief were Ellen F. Rosenblum,
Attorney General, and Benjamin Gutman, Solicitor General.
  Daniel C. Snyder and Public Justice, Washington, D. C.,
and Pete Huffman and Natural Resources Defense Council,
650       N.W. Natural Gas Co. v. Environ. Quality Comm.

Washington, D. C., filed the brief for intervenor-respondent
Natural Resources Defense Council.
   Rachel C. Lee argued the cause for intervenor-petitioner
National Federation of Independent Business. Also on the
briefs were Thomas R. Wood, Geoffrey B. Tichenor, and
Stoel Rives LLP.
   Maura C. Fahey argued the cause for intervenor-respon-
dents Beyond Toxics, Climate Solutions, Environmental
Defense Fund, Oregon Business for Climate, and Oregon
Environmental Council. Also on the brief were Erin Hogan-
Freemole and Crag Law Center.
  C. Robert Steringer, Erica Tatoian, and Harrang Long
Gary Rudnick P.C. filed the brief amicus curiae for Office &
Professional Employees International Union, Local 11.
  Sadie Normoyle and Western Environmental Law
Center filed the brief amicus curiae for Affiliated Tribes of
Northwest Indians.
  Jonah Sanford and Northwest Environmental Defense
Center filed the brief amicus curiae for Northwest
Environmental Defense Center, Pineros Y Campesinos
Unidos del Noroeste, Oregon Public Health Association,
Leslie Hammer, Ph.D., Our Climate, NAACP Eugene-
Springfield Branch #1119, and Community Energy Project.
   Molly Tack-Hooper and Earthjustice (Washington) filed
the brief amicus curiae for Rogue Climate, Verde, and
Columbia Riverkeeper.
  Jesse A. Buss, Bridgett Chevallier, and Willamette Law
Group, PC, filed the brief amicus curiae for New Seasons
Market LLC, SERA Architects, Inc., Indow, Neil Kelly
Company, and Friends of Family Farmers.
   Before Egan, Presiding Judge, and Kamins, Judge, and
Kistler, Senior Judge.
   KAMINS, J.
   Rules invalid.
Cite as 329 Or App 648 (2023)   651
652          N.W. Natural Gas Co. v. Environ. Quality Comm.

           KAMINS, J.

          Petitioners challenge the validity of the administra-
tive rules that establish the Climate Protection Program,
OAR 340-271-0010 to 340-271-9000 (the CPP rules).1 Those
rules impose “cap and reduce” regulations on the distribu-
tion of fossil fuels in the State of Oregon and require certain
large stationary sources to limit their emissions from indus-
trial processes.

         Pursuant to ORS 183.400,2 petitioners raise
numerous assignments of error, contending that the CPP
rules are invalid. In this opinion, we address only one of
those assignments, because it is dispositive regarding the
validity of the CPP rules. Specifically, we agree that the
Environmental Quality Commission (EQC), in adopting
the CPP rules, did not comply with the heightened dis-
closure requirements applicable to it when it adopts rules
that apply to entities required to obtain Title V permits
under the federal Clean Air Act (Title V sources). ORS
468A.327(1).3

        Because EQC, when adopting the CPP rules, did
not comply—or even substantially comply—with the height-
ened disclosure requirements applicable to it when adopting
rules that apply to Title V sources, we conclude that the CPP
rules are invalid.
    1
      Additionally, the CPP rules include amendments to other administrative
rules, such as, as noted by one group of petitioners, OAR 340-012-0054.
    2
      ORS 183.400 provides, in part:
         “The validity of any rule may be determined upon a petition by any per-
    son to the Court of Appeals[.]”
    3
      ORS 468A.327(1) provides:
         “Prior to the adoption, amendment or repeal of any rule pursuant to
    ORS chapter 183 that applies to any facility required to pay fees under
    ORS 468A.315, the Environmental Quality Commission shall include with
    the notice of intended action required under ORS 183.335(1) a statement of
    whether the intended action imposes requirements in addition to the applica-
    ble federal requirements and, if so, shall include a written explanation of:
         “(a) The commission’s scientific, economic, technological, administrative
    or other reasons for exceeding applicable federal requirements; and
         “(b) Any alternatives the commission considered and the reasons that
    the alternatives were not pursued.”
Cite as 329 Or App 648 (2023)                                               653

                           I. BACKGROUND
        The Legislative Assembly has recognized that
global warming “poses a serious threat to the economic well-
being, public health, natural resources and environment of
Oregon.”4 ORS 468A.200(3). Greenhouse gases (GHG) are
gasses which “contribute[ ] to anthropogenic global warm-
ing.” ORS 468A.210(2).
         In 2020, recognizing the danger posed to Oregonians
by GHG, then Governor Brown issued Executive Order
20-04, in which she directed EQC and the Department of
Environmental Quality (DEQ) to develop rules establishing
a sector specific GHG “cap and reduce program.” Specifically,
Governor Brown directed EQC and DEQ to “take actions
necessary” to “cap and reduce” GHG emissions from large
stationary sources, from transportation fuels, and from all
other liquid and gaseous fuels.
        In accordance with that directive, EQC and DEQ
engaged in an extensive and public process to develop the
CPP rules. As adopted, the rules aim to, among other things,
“reduce greenhouse gas emissions from sources in Oregon.”
OAR 340-271-0010(3).
         The CPP rules aim to reduce greenhouse gas emis-
sions in two ways. First, they create a cap-and-reduce sys-
tem under which DEQ distributes compliance instruments
to covered fuel suppliers, with each compliance instrument
authorizing the equivalent of one metric ton of carbon diox-
ide emissions. Second, they impose a technology and oper-
ations-based standard on certain large stationary sources
that requires those sources to determine the best available
emissions reductions and then take steps to achieve those
reductions.
        On review, in additional to various substantive
challenges to the rules, one group of petitioners argues
that the rules are invalid because they were not adopted
in compliance with disclosure requirements for rulemak-
ing in ORS 468A.327(1), which, as noted above, imposes
    4
      “ ‘Global warming’ ” means “ ‘an increase in the average temperature of the
earth’s atmosphere that is associated with the release of greenhouse gases.’ ” ORS
468A.210(1).
654        N.W. Natural Gas Co. v. Environ. Quality Comm.

heightened disclosure requirements for rulemaking when
those rules apply to Title V sources. In response, EQC does
not dispute that it did not comply with the requirements of
ORS 468A.327(1). It contends, however, that we should not
invalidate the CPP rules, because EQC “substantially com-
plied” with those requirements.
         As explained further below, we conclude that in
a rule challenge pursuant to ORS 183.400(4)(c), the stan-
dard under which we review EQC’s compliance with ORS
468A.327(1) is, simply, whether EQC complied with ORS
468A.327(1), not whether EQC “substantially complied,” as
EQC contends. Further, we conclude that, even if EQC is
correct that it needed to only “substantially comply” with
ORS 468A.327(1), it failed to do so. As a result, we conclude
that the CPP rules are invalid.
                      II. ANALYSIS
         We first explain why, in this rule challenge under
ORS 183.400(4)(c), we review for EQC’s compliance with the
rulemaking procedures set forth in ORS 468A.327(1), not
substantial compliance. We then explain that EQC failed to
comply with ORS 468A.327(1) and that, even if substantial
compliance was the standard, EQC failed to substantially
comply with ORS 468A.327(1). Finally, we explain why our
conclusions regarding compliance render the CPP rules
invalid.
A.    EQC Was Required to Comply with ORS 468A.327.
        As noted, petitioners bring this rule challenge pur-
suant to ORS 183.400. “Under ORS 183.400(1), ‘any person’
may petition this court to determine the validity of a rule.”
Ciecko v. DLCD, 290 Or App 655, 661, 415 P3d 1122 (2018)
(some internal quotation marks omitted).
        Our review of an administrative rule under ORS
183.400 “is limited to an examination of the rule under
review, the statutory provisions authorizing the rule, and
the documents necessary to demonstrate compliance with
the applicable rulemaking procedures.” Id. (citing ORS
183.400(3)). “After the limited examination, a court inval-
idates an administrative rule only if it finds that the rule
Cite as 329 Or App 648 (2023)                                             655

violates constitutional provisions, exceeds the statutory
authority of the agency that adopted the rule, or was adopted
without compliance with the applicable rulemaking proce-
dures.” Id. (citing ORS 183.400(4)).5
         As a threshold issue, the parties dispute what stan-
dard this court applies when deciding whether to invali-
date rules based on petitioners’ procedural objections under
ORS 183.400(4)(c). EQC, citing ORS 183.335(11)(a), contends
that this court reviews the adequacy of EQC’s notice of pro-
posed rulemaking for “substantial compliance” with ORS
468A.327(1). As described more fully below, ORS 183.335
requires administrative agencies to publish a notice of pro-
posed rulemaking prior to rulemaking, sets forth certain
requirements for the contents of that notice, and provides that
“a rule is not valid unless adopted in substantial compliance
with the provisions of this section.” As EQC points out, and as
also described more fully below, the “ ‘doctrine of substantial
compliance has previously been used * * * to avoid the harsh
results of insisting on literal compliance with statutory notice
provisions where the purpose of these requirements has been
met.’ ” Friends of the Columbia Gorge v. Energy Fac. Siting
Coun., 365 Or 371, 389, 446 P3d 53 (2019) (quoting Brown v.
Portland School Dist. #1, 291 Or 77, 81, 628 P2d 1183 (1981)
(omission in Friends of the Columbia Gorge)).
         Petitioners disagree. They contend that actual com-
pliance with ORS 468A.327(1) is required, and that sub-
stantial compliance is not sufficient.
         “Whether the doctrine of substantial compliance
applies is a question of statutory interpretation.” Tompte v.
Stone, 195 Or App 599, 602, 98 P3d 1171 (2004); Parthenon
Construction & Design, Inc. v. Neuman, 166 Or App 172, 180,
999 P2d 1169 (2000) (considering the text of a statute in
determining whether the doctrine of substantial compliance
was applicable). In interpreting a statute, we “ascertain the
   5
       ORS 183.400(4) provides:
       “The court shall declare the rule invalid only if it finds that the rule:
       “(a) Violates constitutional provisions;
       “(b) Exceeds the statutory authority of the agency; or
       “(c) Was adopted without compliance with applicable rulemaking
   procedures.”
656       N.W. Natural Gas Co. v. Environ. Quality Comm.

legislature’s intentions by examining the text of the stat-
ute in its context, along with relevant legislative history,
and, if necessary, canons of construction.” State v. Little, 326
Or App 788, 791, 533 P3d 11070 (2023) (internal quotation
marks omitted). In ascertaining the legislature’s intentions,
our lodestar is the statutory text, as “there is no more per-
suasive evidence of the intent of the legislature than the
words by which the legislature under-took to give expres-
sion to its wishes.” SAIF v. Ward, 369 Or 384, 394, 506 P3d
386 (2022) (internal quotation marks omitted).
         In this case, to help frame our analysis regarding
whether the standard is “compliance” or “substantial com-
pliance,” we begin by describing the Supreme Court’s deci-
sion in Friends of the Columbia Gorge, before turning to the
text, context, and legislative history of ORS 468A.327(1).
        1. Friends of the Columbia Gorge
         In Friends of the Columbia Gorge, the Supreme
Court considered whether to apply a “compliance” or a “sub-
stantial compliance” standard when evaluating the validity
of a rule in a challenge brought under ORS 183.400(4)(c).
         In that case, the petitioners challenged rules adopted
by the Energy Facility Siting Council (EFSC), contending
that, in adopting the rules at issue, EFSC had failed to com-
ply with the procedural requirements of ORS 183.335. 365
Or at 376. The petitioners argued that a “strict-compliance”
standard applied, because ORS 183.400(4)(c) requires “com-
pliance with applicable rulemaking procedures.” Id. at 377.
EFSC argued that a “substantial compliance” standard
applied, because “chapter 183 requires only ‘substantial
compliance’ with the notice procedures contained in ORS
183.335” and each of the “petitioners’ procedural objection
arises under ORS 183.335.” Id. at 376-77.
         Framing the issue as one involving its “standard
of review” and “what standard [the Supreme Court] applies
when deciding whether to invalidate rules based on a peti-
tioner’s procedural objections,” the court agreed with EFSC
that “substantial compliance” was the standard, reasoning:
   “Petitioners’ reliance on ORS 183.400(4)(c) begs the ques-
   tion of what an agency must do to comply with applicable
Cite as 329 Or App 648 (2023)                                                657

    rulemaking procedures. At least with regard to the proce-
    dures in ORS 183.335, an agency satisfies those statutory
    requirements by substantially complying with the proce-
    dures set out in the statute. In that sense, a rule adopted in
    substantial compliance with ORS 183.335 is a rule adopted
    in ‘compliance with applicable rulemaking procedures.’ ”
Id. at 377.
         In our view, the Supreme Court’s analysis in Friends
of the Columbia Gorge demonstrates that, in reviewing a
rule challenge brought under ORS 183.400(4)(c), whether
we review for “compliance” or “substantial compliance” is a
function of the statutory section setting forth the specific
procedures for promulgating the rule. While some rulemak-
ing statutes, such as ORS 183.335—the statute at issue in
Friends of the Columbia Gorge—require only substantial
compliance, others, such as ORS 196.471, appear to require
actual compliance. See Ciecko, 290 Or App at 668 (in chal-
lenge under ORS 183.400(4)(c) asserting agency did not com-
ply with rulemaking requirements set forth in ORS 196.471,
invalidating rules because, among other reasons, agency
failed to “comply with applicable rulemaking procedures
set out in ORS 196.471”).6 Thus framed, the question in this
     6
       We pause to note that, historically, we have not always been consistent in
describing our standard of review in rule challenges brought pursuant to ORS
183.400(4)(c).
     In Ciecko, for example, we applied a compliance standard, invalidating rules
when those rules did not “comply with the applicable rulemaking procedures.”
290 Or App at 668. In explaining our standard of review under ORS 183.400,
we noted that “a court invalidates an administrative rule only if it finds that
the rule violates constitutional provisions, exceeds the statutory authority of the
agency that adopted the rule, or was adopted without compliance with the appli-
cable rulemaking procedures.” Id. (citing ORS 183.400(4)). But we did not further
explain why we were applying a “compliance” standard rather than a “substan-
tial compliance” standard in that case. See generally id.
     In contrast, in County of Morrow v. Dept. of Fish & Wildlife, 178 Or App 329,
333, 37 P3d 180 (2001), we pointed to a “substantial compliance” standard being
applicable, stating, “[w]e may invalidate an administrative rule if it was adopted
without substantial compliance with applicable rulemaking procedures. ORS
183.335(10)(a); ORS 183.400(4)(c).” But beyond bare citation to ORS 183.335(10)
(a) and ORS 183.400(4)(c), we did not explain why a “substantial compliance”
standard was appliable given the particular challenges to the administrative
rule in that case. Further, in County of Morrow, our analysis demonstrated the
administrative agency in fact complied with the applicable rulemaking proce-
dures and therefore the result would have been the same regardless of whether
our review was for “compliance” or “substantial compliance.” That is, we do not
understand our standard of review to have been a live issue in the case.
658           N.W. Natural Gas Co. v. Environ. Quality Comm.

case is whether the legislature intended to incorporate the
doctrine of substantial compliance into ORS 468A.327(1) or
whether it intended to require actual compliance.
        With that in mind, we turn to ORS 468A.327(1)
to determine whether it requires substantial or actual
compliance.
           2. ORS 468A.327(1)
         The particular rulemaking requirements that peti-
tioners contend EQC did not comply with are found in ORS
468A.327(1), which provides:
            “Prior to the adoption, amendment or repeal of any
    rule pursuant to ORS chapter 183[, i.e., the Administrative
    Procedures Act,] that applies to any facility required to pay
    fees under ORS 468A.315[, i.e., any facility with a Title V
    operating permit], the Environmental Quality Commission
    shall include with the notice of intended action required
    under ORS 183.335(1) a statement of whether the intended
    action imposes requirements in addition to the applicable
    federal requirements and, if so, shall include a written
    explanation of:
        “(a) The commission’s scientific, economic, technologi-
    cal, administrative or other reasons for exceeding applica-
    ble federal requirements; and
       “(b) Any alternatives the commission considered and
    the reasons that the alternatives were not pursued.” 7
    (Emphases added.)

    In any event, as described above, in view of the Supreme Court’s analysis in
Friends of the Columbia Gorge, we understand our standard of review under ORS
183.400(4)(c) to turn on the particular statute or rule imposing the rulemaking
procedures at issue.
    7
      The parties do not dispute that the phrase “facility required to pay fees
under ORS 468A.315” in ORS 468A.327(1) means any facility with a Title V oper-
ating permit.
    In short, ORS 468A.315(1) sets fees for sources “subject to the federal operating
permit program,” a phrase which ORS 468A.300(3) defines as “the program estab-
lished by [EQC] and the [DEQ] pursuant to ORS 468A.310.” And ORS 468A.310
requires EQC and DEQ to establish “a federal operating permit program as
required to implement Title V [of the federal Clean Air Act, see ORS 468A.300(5)].
See also Testimony, Joint Subcommittee on Natural Resources, Senate Bill (SB)
107, Apr 19, 2007 (Andrew Ginsburg, DEQ air quality administrator) (explaining
that the legislation now codified at ORS 468A.327(1) “would require us to do more
public disclosure when we adopt rules that affect Title V sources”).
Cite as 329 Or App 648 (2023)                             659

         As an initial matter, in considering what the leg-
islature intended with regard to ORS 468A.327(1), we note
that it twice uses the word “shall”—i.e., the EQC “shall * * *
include a statement” of whether the intended action imposes
requirements in addition to the applicable federal require-
ments and, if so, “shall include a written explanation” of the
“commission’s scientific, economic, technological, admin-
istrative or other reasons for exceeding applicable federal
requirements” and any “alternatives the commission con-
sidered and the reasons that the alternatives were not pur-
sued.” The term “ ‘shall’ is a command expressing what is
mandatory.” Bacote v. Johnson, 333 Or 28, 33, 35 P3d 1019
(2001). That is, when the legislature uses the term “shall,” it
intends to create a mandatory obligation. Little, 326 Or App
at 793 (citing cases using the term “shall” for the proposition
that “[t]he legislature knows how to indicate a mandatory
obligation”). That indicates that the legislature intended the
requirements imposed by ORS 468A.327(1) on EQC when
adopting rules that apply to Title V sources to be mandatory.
         It is also noteworthy that, elsewhere, the legislature
has expressly imposed a “substantial compliance” standard
when that is what it intended. See, e.g., ORS 250.085 (“The
Supreme Court shall review the title for substantial compli-
ance with the requirements of ORS 250.035.”); ORS 222.310
(“ORS 222.210 to 222.310 shall be construed liberally, and
substantial compliance with the provisions of those sections
shall be sufficient.”); ORS 25.287(d) (“The only issues at
proceedings under this subsection are whether three years
have elapsed, or such shorter cycle as determined by rule
of the department, and whether the support obligation is in
substantial compliance with the formula established under
ORS 25.275.”). And it is particularly noteworthy that, else-
where, when the legislature has used “shall” in conjunction
with a rulemaking requirement but intended to impose only
a “substantial compliance” standard, it has said so expressly.
ORS 183.335 (setting forth requirements for rulemaking
using the word “shall” but noting “a rule is not valid unless
adopted in substantial compliance with the provisions of this
section”); ORS 183.341 (providing that agencies “shall adopt
rules of procedure which will provide a reasonable oppor-
tunity for interested persons to be notified of the agency’s
660          N.W. Natural Gas Co. v. Environ. Quality Comm.

intention to adopt, amend or repeal a rule” and noting rules
are invalid if not adopted in “substantial compliance” with
the rules regarding notice adopted by the agency).
         That indicates that the “legislature knows how to
provide for substantial compliance [with] a statutory require-
ment when it decides that such a doctrine is appropriate.”
Tompte, 195 Or App at 603; see also Villanueva v. Board of
Psychologist Examiners, 175 Or App 345, 357, 27 P3d 1100
(2001), adh’d to on recons, 179 Or App 134, 39 P3d 238 (2002)
(“When the legislature [has] intended to permit substantial
compliance with * * * statutory notice requirements, [it has]
said so expressly.”). And further, it knows how to do so in the
context of rulemaking. ORS 183.335(11)(a); ORS 183.341(5).
But it did not do so in ORS 468A.327. Thus, it appears that
the legislature intended to require EQC to comply—not
merely “substantially comply”—with the requirements of
ORS 468A.327 when adopting rules that apply to Title V
sources. See ORS 174.010 (“In the construction of a statute,
the office of the judge is simply to ascertain and declare
what is, in terms or in substance, contained therein, not to
insert what has been omitted[.]”).
        One piece of statutory context potentially pointing in
the other direction is ORS 183.335, the statute EQC cites in
contending that we should apply a “substantial compliance”
standard in reviewing this rule challenge. Indeed, ORS
183.335(1) is expressly cross-referenced in ORS 468A.327(1).
         As relevant here, ORS 183.335(1)8 requires agen-
cies, “prior to the adoption, amendment or repeal of any
rule,” to give “notice of its intended action” in various ways;
   8
     ORS 183.335(1) provides:
   “Prior to the adoption, amendment or repeal of any rule, the agency shall give
   notice of its intended action:
       “(a) In the manner established by rule adopted by the agency under ORS
   183.341(4), which provides a reasonable opportunity for interested persons to
   be notified of the agency’s proposed action;
       “(b) In the bulletin referred to in ORS 183.360 at least 21 days prior to
   the effective date;
       “(c) At least 28 days before the effective date, to persons who have
   requested notice pursuant to subsection (8) of this section; and
       “(d) Delivered only by electronic mail, at least 49 days before the effective
   date, to the persons specified in subsection (15) of this section.”
Cite as 329 Or App 648 (2023)                                                 661

ORS 183.335(2)9 contains requirements regarding the con-
tents of the notice of intended action; and ORS 183.335(11)(a)
provides:
       “Except [in circumstances not present here], a rule is
   not valid unless adopted in substantial compliance with
   the provisions of this section in effect on the date that the
   notice required under subsection (1) of this section is deliv-
   ered to the Secretary of State for the purpose of publication
   in the bulletin referred to in ORS 183.360.”
         We do not, however, understand the substantial
compliance provision set forth in ORS 183.335(11)(a) to
apply to the information that EQC is required to disclose
under ORS 468A.327(1), as EQC contends. That is because,
by its terms, the substantial compliance provision of ORS
   9
     ORS 183.335(2) provides, in part:
        “(b) The agency shall include with the notice of intended action given
   under subsection (1) of this section:
        “(A) A citation of the statutory or other legal authority relied upon and
   bearing upon the promulgation of the rule;
        “(B) A citation of the statute or other law the rule is intended to
   implement;
        “(C) A statement of the need for the rule and a statement of how the rule
   is intended to meet the need;
        “(D) A list of the principal documents, reports or studies, if any, prepared
   by or relied upon by the agency in considering the need for and in preparing
   the rule, and a statement of the location at which those documents are avail-
   able for public inspection. The list may be abbreviated if necessary, and if so
   abbreviated there shall be identified the location of a complete list;
        “(E) A statement of fiscal impact identifying state agencies, units of
   local government and the public that may be economically affected by the
   adoption, amendment or repeal of the rule and an estimate of that economic
   impact on state agencies, units of local government and the public. In con-
   sidering the economic effect of the proposed action on the public, the agency
   shall utilize available information to project any significant economic effect
   of that action on businesses which shall include a cost of compliance effect
   on small businesses affected. For an agency specified in ORS 183.530, the
   statement of fiscal impact shall also include a housing cost impact statement
   as described in ORS 183.534;
        “(F) A statement identifying how adoption of the rule will affect racial
   equity in this state;
        “(G) If an advisory committee is not appointed under the provisions of
   ORS 183.333, an explanation as to why no advisory committee was used to
   assist the agency in drafting the rule; and
        “(H) A request for public comment on whether other options should be
   considered for achieving the rule’s substantive goals while reducing the neg-
   ative economic impact of the rule on business.”
662          N.W. Natural Gas Co. v. Environ. Quality Comm.

183.335(11)(a) refers to only the requirements imposed
in ORS 183.335 itself—that is the plain meaning of “sub-
stantial compliance with the provisions of this section.”
(Emphasis added.) Put another way, the requirements
imposed by ORS 468A.327(1) on EQC when adopting rules
that apply to Title V sources are not requirements imposed
by ORS 183.335. And we do not think it is a natural reading
of ORS 468A.327(1) and ORS 183.335 that the requirements
imposed by ORS 468A.327(1) become requirements imposed
by ORS 183.335 merely because they must be disclosed in
the notice that is required by ORS 183.335(1). Had the legis-
lature intended substantial compliance with the disclosure
requirements set forth in ORS 468A.327(1) to be sufficient,
it would have said so, just as it did when setting forth cer-
tain requirements for rulemaking in other sections of the
Oregon Revised Statutes, such as ORS 183.335 and ORS
183.341, as described above.10
         Our understanding that the legislature intended
compliance (not merely substantial compliance) with ORS
468A.327(1) finds support in that statute’s legislative his-
tory. That history reflects that the legislative intent in
enacting ORS 468A.327(1) was to require heightened disclo-
sure requirements for EQC when adopting rules that apply
to Title V sources in part to provide assurance to industry
that EQC had “looked at all the issues.” Testimony, Joint
Subcommittee on Natural Resources, Senate Bill (SB) 107,
Apr 19, 2007 (John Ledger, Associated Oregon Industries).
        ORS 468A.327 was enacted as 2007, as SB 107.
Or Laws 2007, ch 480, § 3. As initially introduced, the bill
increased fees on Title V sources in order to assist with staff-
ing shortages at DEQ in operating Oregon’s Title V program.
SB 107, Introduced; Testimony, Joint Subcommittee on
Natural Resources, SB 107, Apr 19, 2007 (Andrew Ginsburg,
DEQ air quality administrator). Under federal law, that
program is required to be completely funded from fees from
Title V sources, and the fees had not kept up with costs of
    10
       We note that ORS 183.335 was enacted in 1971, while ORS 468A.327 was
enacted over three decades later in 2007. Or Laws 2007, ch 480, § 3. We do not
understand the intent of the 1971 Legislative Assembly in enacting ORS 183.335
to have any bearing on our effort to discern the intent of the 2007 Legislative
Assembly in enacting ORS 468A.327.
Cite as 329 Or App 648 (2023)                                              663

running the program. Id. After it was introduced, SB 107
was amended to include the disclosure requirements now
found in ORS 468A.327(1), to provide the right to a hearing
before EQC in certain circumstances when new rules apply
to Title V sources,11 and to phase in the fee increases that
were proposed in the initial version of SB 107.
         Testifying in support of the amendments to SB 107,
DEQ air quality administrator Andrew Ginsburg explained
that the amendments to SB 107 and, specifically, the dis-
closure provisions now in ORS 468A.327(1), would “require
us to do more public disclosure when we adopt rules that
affect Title V sources.” Testimony, Joint Subcommittee
on Natural Resources, SB 107, Apr 19, 2007 (Andrew
Ginsburg). Ginsburg explained that prior to SB 107, if EQC
adopted “a rule that’s more stringent than a federal rule, [it]
already disclosed the difference and the reason that we’re
being different from the federal law,” but that SB 107 added
the requirement that EQC also “describe what alternatives
we considered and why we rejected the alternatives.” Id.
Additionally, John Ledger, on behalf of Associated Oregon
Industries (AOI), explained that AOI supported SB 107, as
amended to contain the disclosure requirements now in
ORS 468A.327(1), in part, because it “gives assurances to
industry that when the EQC does go beyond federal [law]
they’ve looked at all the issues” and “gets more information
   11
      The hearing provisions in ORS 468A.327 provide, in pertinent part:
        “(3) Notwithstanding ORS 183.335 (3), an opportunity for an oral hear-
   ing before the commission regarding the statement specified in subsections
   (1) and (2) of this section shall be granted only if:
        “(a) The request for a hearing is received, within 14 days after the com-
   mission issues the notice of intended action required under ORS 183.335 (1),
   from 10 persons or from an association having no fewer than 10 members;
   and
        “(b) The request describes how the persons or association that made the
   request will be directly harmed by the adoption, amendment or repeal of a
   rule under subsection (1) of this section.
        “(4) If an oral hearing is granted under subsection (3) of this section,
   the commission shall give notice of the hearing at least 14 days before the
   hearing to the persons or association requesting the hearing, to any persons
   who have requested notice pursuant to ORS 183.335 (8) and to the persons
   specified in ORS 183.335 (15).
        “(5) Subsection (3) of this section does not apply if the commission
   includes with the notice of intended action required under ORS 183.335 (1) a
   notice that an oral hearing will be held before the commission.”
664          N.W. Natural Gas Co. v. Environ. Quality Comm.

out there to the public and everybody else.” Testimony, Joint
Subcommittee on Natural Resources, SB 107, Apr 19, 2007
(John Ledger, AOI). Ledger explained that AOI did not sup-
port SB 107 as initially introduced, but did support the bill
with the amendments that required EQC to make the dis-
closures now required by ORS 468A.327(1). Id.
         In consideration of that legislative history, as well
as the statutory text and context, we conclude that ORS
468A.327(1) was intended to ensure more—not less—dis-
closure to Title V sources and not incorporate the doctrine
of substantial compliance. That is, we understand ORS
468A.327 to require what it says—that when EQC makes
rules that apply to Title V sources, it shall disclose the infor-
mation specified in ORS 468A.327(1).
        In sum, in rule challenges brought under ORS
183.400(4)(c) contending that EQC did not comply with ORS
468A.327(1), we review for whether EQC actually complied
with the requirements of ORS 468A.327, not for whether
EQC “substantially complied.”
B.    EQC Did Not Comply, Nor Did it Substantially Comply,
      with ORS 468A.327(1).
         Petitioners challenging EQC’s compliance with the
disclosure requirements of ORS 468A.327(1) raise two con-
tentions: first, that the notice of proposed rulemaking in
the Secretary of State’s bulletin improperly omitted “(1) any
statement regarding whether the CPP Rules exceed federal
requirements on Title V facilities, (2) any description of the
alternatives considered, and (3) any explanation why those
alternatives were rejected”; and second, that other forms
of notice EQC gave “failed to include the statutorily man-
dated information about alternatives and why they were not
pursued.”
         In response, EQC “acknowledges that the notice
submitted to the Secretary of State did not include an
explicit statement about additional federal requirements
for large stationary sources,”12 but contends that on the
facts of this case “EQC substantially complied with ORS
    12
       Although EQC points out that the Secretary of State’s bulletin did “contain
notice that the regulations apply to large stationary sources.”
Cite as 329 Or App 648 (2023)                             665

468A.327.” Specifically, EQC asserts that its notice of pro-
posed rulemaking, which it posted on its website and sent
to a distribution list of over 20,000 recipients, contained the
statement required by ORS 468A.327(1). And, according to
EQC, that notice, coupled with “18 months of public pro-
cess regarding the rules,” demonstrates that the public and
interested parties had “ample notice that the rules would
impose additional requirements on large stationary sources,
explained why the rules were needed, and explained the
alternatives considered.” Therefore, in EQC’s view, it sub-
stantially complied with ORS 468A.327.
         As we have concluded, substantial compliance with
ORS 468A.327(1) is not sufficient. The statute requires actual
compliance. EQC did not comply with ORS 468A.327(1) when
it adopted the CPP rules, nor does it even contend that it did.
We thus conclude, as explained below, that the CPP rules
are invalid. But further, to the extent that ORS 468A.327(1)
does incorporate the doctrine of substantial compliance, we
would reach the same conclusion regarding the validity of
the CPP rules.
        Substantial compliance can “be defined only in gen-
eral language,” but at bottom it “ ‘requires compliance in
respect to the essential matters necessary to assure every
reasonable objective of the statute.’ ” Rogers v. Roberts,
300 Or 687, 691, 717 P2d 620 (1986) (quoting Sabatini v.
Jayhawk Construction Co., Inc., 214 Kan 408, 411, 520 P2d
1230 (1974)). “ ‘What constitutes substantial compliance
with a statute is a matter depending on the facts of each
particular case.’ ” Id. at 692 (quoting In re Santore, 28 Wash
App 319, 327, 623 P2d 702, 1234 (1981)).
         Here, the chief difficulty with EQC’s argument is
with the notice of proposed rulemaking itself. That is, we
disagree that that notice contained the statement required
by ORS 468A.327(1) as EQC contends. EQC’s notice stated,
in pertinent part, as follows:
   “Federal relationship
   “Relationship to federal requirements
   “ORS 183.332, 468A.327 and OAR 340-011-0029 require
   DEQ to attempt to adopt rules that correspond with
666       N.W. Natural Gas Co. v. Environ. Quality Comm.

   existing equivalent federal laws and rules unless there are
   reasons not to do so.
   “The proposed rules are ‘in addition to federal require-
   ments’ since there are no federal regulations that require
   the reduction of greenhouse gas emissions from most of the
   affected parties.”
   “ *****
   “What alternatives did DEQ consider if any?
   “In designing the Climate Protection Program, DEQ con-
   sidered many alternatives contained in the proposed rule.
   Extensive outreach with stakeholders beginning in March
   2020, input from the advisory committee in 2021, and pub-
   lic comment throughout the process informed the design of
   the program. Documentation is in the rulemaking record.”
(Boldface in original; font size modified.) But, as noted
above, ORS 468A.327(1)(b) requires that ECQ’s notice of
proposed rulemaking include “a written explanation” of “[a]
ny alternatives the commission considered and the reasons
that the alternatives were not pursued.” We understand
that requirement to be essential to serving one purpose of
ORS 468A.327(1), viz., to “give[ ] assurances to industry that
when the EQC does go beyond federal [law] they’ve looked at
all the issues.” Testimony, Joint Subcommittee on Natural
Resources, SB 107, Apr 19, 2007 (John Ledger, AOI).
          Here, the rulemaking record reflects that EQC
and DEQ did, in fact, consider alternatives to the CPP
rules that were adopted, and we do not understand EQC to
argue otherwise. Indeed, the notice of proposed rulemaking
itself reflects that “DEQ considered numerous options that
were informed by other jurisdictions’ greenhouse gas pro-
grams.” Regarding those alternatives, however, the notice
of proposed rulemaking merely states that “DEQ consid-
ered many alternatives contained in the proposed rule” and
asserts “[d]ocumentation is in the rulemaking record.” It
does not explain or attempt to explain “the reasons that the
alternatives were not pursued” or describe those alterna-
tives, as required by ORS 468A.327(1)(b). Nor does it point
to where in the rulemaking record such information might
be found, or even assert that that information can be found
in the rulemaking record. Nor does the 18 months of public
Cite as 329 Or App 648 (2023)                           667

process, during which DEQ and EQC sought input from the
public and stakeholders, substantially satisfy the require-
ment that EQC in its notice of rulemaking reduce to writing
why it was not pursuing the alternatives it had considered
when regulating Title V sources. It is not “insisting on lit-
eral compliance with statutory notice provisions,” Friends of
the Columbia Gorge, 365 Or at 389, to require EQC’s notice
to reflect an attempt to comply with ORS 468A.327(1)(b),
which, as noted, we understand to be essential to serving
one purpose of ORS 468A.327(1).
         Although EQC engaged in a robust process that
provided the public a great deal of transparency and numer-
ous opportunities for engagement, it nevertheless did not
substantially comply with its obligation to provide the spe-
cific types of disclosures required by ORS 468A.327(1)(b).
Thus, even if we were reviewing for substantial compliance
instead of compliance, we would reach the same conclusion
regarding the validity of the CPP rules.
C. The CPP Rules Are Invalid.
         The remaining question is the appropriate remedy;
that is, which rules are we are required to hold invalid in
this rule challenge pursuant to ORS 183.400(4)(c). In a foot-
note, EQC contends that if we agree with petitioners’ argu-
ment that it failed to provide the disclosure required under
ORS 468A.327(1), the correct remedy would be to invalidate
only those rules that regulate large stationary sources. In
response, petitioners who challenge EQC’s compliance with
ORS 468A.327(1), contend that at least one Title V source
is a “fuel supplier” under the rules creating the cap-and-
reduce system. In their view, because the rules creating the
cap-and-reduce system apply to a Title V source and were
adopted without compliance with ORS 468A.327, those
rules, too, are invalid.
        We agree with petitioners. As noted, the heightened
disclosure requirements in ORS 468A.327(1) are applica-
ble when EQC adopts any rule “that applies to any facility
required to pay fees under ORS 468A.315,” i.e., any facility
with a Title V operating permit. Because the rules creating
the cap-and-reduce system do apply to at least one Title V
668           N.W. Natural Gas Co. v. Environ. Quality Comm.

source and were adopted without compliance with ORS
468A.315(1), those rules are invalid.13
                           III.    CONCLUSION
       In sum, for the reasons above, we conclude that the
CPP rules are invalid.
           Rules invalid.

    13
       We also note that, part and parcel with those CPP rules discussed above
that apply directly to Title V sources, are CPP rules pertaining to community
climate investment entities, OAR 340-271-0900 through 340-271-0990. It is not
clear to us how those rules could function on their own without the rules that
create the cap-and-reduce system, nor does EQC advance an argument that we
should hold those rule valid if we determine that the rules that apply to large sta-
tionary sources and the rules that create the cap-and-reduce system are invalid,
as we do in this opinion. See, e.g., OAR 340-271-0900(2) (setting forth permissible
uses for community climate investment funds); OAR 340-271-0020(9) (defining
community climate investment funds as “money paid by a covered fuel supplier to
a community climate investment entity to support implementation of community
climate investment projects”).