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Columbia Pacific Building Trades Council v. City of Portland

Court of Appeals of Oregon

January 4, 2018

COLUMBIA PACIFIC BUILDING TRADES COUNCIL, Portland Business Alliance, Western States Petroleum Association, and Working Waterfront Coalition, Respondents,
v.
CITY OF PORTLAND, Respondent-below, and COLUMBIA RIVERKEEPER, Oregon Physicians for Social Responsibility, Portland Audubon Society, and Center for Sustainable Economy, Petitioners. COLUMBIA PACIFIC BUILDING TRADES COUNCIL, Portland Business Alliance, Western States Petroleum Association, Respondents, and WORKING WATERFRONT COALITION, Intervenor-Petitioner below,
v.
CITY OF PORTLAND, Petitioner, and COLUMBIA RIVERKEEPER, Oregon Physicians for Social Responsibility, Portland Audubon Society, and Center for Sustainable Economy, Intervenors-Respondents below.

         [289 Or.App. 740] Argued and submitted October 13, 2017.

         Land Use Board of Appeals 2017001

          Maura C. Fahey argued the cause for petitioners Columbia Riverkeeper, Oregon Physicians for Social Responsibility, Portland Audubon Society, and Center for Sustainable Economy. With her on the brief were Scott Hilgenberg and Crag Law Center.

          Denis M. Vannier argued the cause for petitioner City of Portland. With him on the brief were Linly F. Rees, Maja K. Haium, and Lauren A. King.

          Bruce L. Campbell and William L. Rasmussen argued the cause for respondents Columbia Pacific Building Trades Council, Portland Business Alliance, and Western States Petroleum Association. With them on the brief were Steven G. Liday and Miller Nash Graham & Dunn LLP.

          No appearance for respondent Working Waterfront Coalition.

          Harry Auerbach and Philip Thoennes fled the brief amicus curiae for League of Oregon Cities.

          Before Armstrong, Presiding Judge, and Tookey, Judge, and Shorr, Judge.

         Case Summary: The City of Portland (city) and Columbia Riverkeeper (Riverkeeper), among others, petition for judicial review of an order by the Land Use Board of Appeals (LUBA) that reversed City Ordinance No. 188142 (the ordinance). That ordinance amended the city's zoning code and, with some exceptions, prohibited new fossil-fuel terminals and caps the size of existing terminals within the city. On judicial review, the city and Riverkeeper argue that LUBA erred in concluding that the ordinance violates the dormant Commerce Clause of the United States Constitution; Statewide Planning Goal 2, OAR 660-015-0000(2); and Statewide Planning Goal 12, OAR 660-015-0000(12). Held: First, LUBA erred in concluding that the ordinance violated the dormant Commerce Clause. The ordinance did not discriminate between in-state and out-of-state economic actors, and respondents failed to meet their burden to demonstrate that the ordinance's burdens on interstate commerce were clearly excessive in relation to its putative local benefits. LUBA also erred in holding that the ordinance violated Goal 12. LUBA concluded that the ordinance did not degrade the performance of an existing or planned transportation facility such that it would not meet the performance standards identified in the city's transportation system plan (TSP) in violation of OAR 660-012-0060, but nevertheless then incorrectly concluded that the ordinance still potentially affected whether that TSP remained in compliance with Goal 12. Finally, LUBA did not error in concluding that the ordinance [289 Or.App. 741] violated Goal 2. Nothing in the record was so at odds with LUBA's conclusion that the Court of Appeals could infer that LUBA misunderstood or misapplied the substantial evidence standard.

         Reversed and remanded in part.

         [289 Or.App. 742] SHORR, J.

         In this review of an order by the Land Use Board of Appeals (LUBA), we first consider whether certain zoning code amendments enacted by the City of Portland violate the dormant Commerce Clause of the United States Constitution. The amendments were designed to stop the expansion of existing fossil-fuel terminals and limit the size of some new terminals within the city. Contrary to LUBA's opinion and order, we conclude that the amendments do not violate the dormant Commerce Clause. The other issues, more traditional to land use disputes, are whether the amendments are inconsistent with Statewide Planning Goal 2, OAR 660-015-0000(2), and Statewide Planning Goal 12, OAR 660-015-0000(12). As to those issues, we conclude, first, that LUBA's order is not unlawful in substance when it concludes that the amendments violated Goal 2. However, we conclude that the portion of LUBA's order indicating that the city did not comply with Goal 12 is unlawful in substance. As a result, we reverse LUBA's opinion and order as it relates to the dormant Commerce Clause and Goal 12 and otherwise affirm.

         THE BASIC PROCEDURAL HISTORY

         The city and Columbia Riverkeeper (Riverkeeper), among others, petition for judicial review of a LUBA order that reversed City Ordinance No. 188142 (the ordinance).[1]That ordinance amends the city's zoning code and, with some exceptions, prohibits new fossil-fuel terminals and caps the size of existing terminals within the city.[2] After the city enacted the ordinance, respondents, including the Columbia Pacific Building Trades Council (Columbia Pacific), appealed to LUBA. Among other things, Columbia Pacific argued that the amendments violate the dormant Commerce Clause and are inconsistent with Statewide Planning Goals 2 and 12. LUBA, sitting as a one-member [289 Or.App. 743] panel, [3] agreed and concluded that the amendments violate the dormant Commerce Clause and Goals 2 and 12.

         THE BACKGROUND FACTS AND AMENDMENTS

         We begin with a background of the relevant material facts and the amendments. The following facts and background are taken from the LUBA opinion, [4] the relevant city ordinance, the amendments, and the Portland City Council resolution.

         Portland is one of the largest ports on the West Coast, located at the confluence of the Columbia and Willamette Rivers. In 2015, there were industry proposals to build large fuel distribution terminals in the Pacific Northwest, including in an industrial area of the city, to facilitate the distribution of fossil fuels throughout the West Coast and to export markets. Besides Portland, there were proposals to build at least eight other large export terminals in other parts of the Pacific Northwest for distribution to export markets.

         In November 2015, the Portland City Council unanimously passed Resolution 37168. Because of the city council's concerns regarding, among other things, (1) the risks of the location of fossil-fuel infrastructure in an earthquake zone and (2) reducing the city's contribution to greenhouse gasses, pollution, and climate change, the city council stated that it would "actively oppose expansion of infrastructure whose primary purpose is transporting or storing fossil fuels in or through Portland or adjacent waterways." The resolution directed the Bureau of Planning and Sustainability (BPS) to develop proposed zoning code amendments to advance the policies in the resolution.

         Relatedly, in June 2016, the city adopted a new comprehensive plan. That plan included a new policy, Policy 6.48, which states that it is city policy to "[l]imit fossil fuel distribution and storage facilities to those necessary to serve the regional market." That policy did not take effect until January 2018. However, the city cited it as guidance when adopting the amendments.

         [289 Or.App. 744] In response to Resolution 37168, BPS prepared the draft amendments and the city council then unanimously adopted them with some changes. The amendments amend the city zoning code to create a new land use category called "Bulk Fossil Fuel Terminals." The amendments identify the areas in which bulk fossil-fuel terminals are permitted. The amendments permit all "Existing Bulk Fossil Fuel Terminals, " but those facilities cannot expand beyond the storage capacity that they had as of the effective date of the amendments. The amendments also prohibit new "Bulk Fossil Fuel Terminals, " essentially prohibiting new fossil-fuel terminals that store more than 2 million gallons of fossil fuel, but permitting those that store 2 million gallons or fewer. There are seven exceptions, discussed later in this opinion, that permit the construction of new bulk terminals that hold more than 2 million gallons. Those exceptions include allowances for construction of new bulk terminals in places like airports that store airplane fuel, retail gas stations, and terminals built for distributors and wholesalers who receive and deliver fuel solely by trucks.

         The existing terminals consist of 10 petroleum terminals and one natural gas terminal clustered in industrial northwest Portland. Those are centrally located near the terminus of the Olympic Pipeline, which delivers petroleum products from refineries in the Puget Sound that are bound for markets in Oregon and southwest Washington. The terminals sit in an area that is in a moderate- to high-risk earthquake liquefaction zone. In enacting the amendments, the city noted that Portland had experienced numerous earthquakes in the past, ranging from magnitude 4.5 to 9.0, and that it is certain to experience seismic events in the future. Many of the individual storage tanks were built before seismic design requirements were adopted.

         The existing terminals hold from 11.6 to 67 million gallons and supply approximately 90 percent of the fossil fuel for Oregon. The terminals have approximately 300 tanks that store petroleum products and gas, which are typically transloaded into other modes of transportation (trucks, trains, pipelines) for delivery throughout Oregon. As noted, much of the petroleum and gas coming through Portland is bound for Oregon, but some of the products [289 Or.App. 745] go outside the state to places such as Washington. While Oregon is an importer of fossil fuels and gas, no fossil-fuel sources or refineries exist either in Portland or more generally in Oregon. As discussed more fully below, Oregon does not have companies or individuals who are competitors in the market for the export of fossil fuels to other states or countries. Oregon is not a participant in that export market.

         THE AMENDMENTS DO NOT VIOLATE THE DORMANT COMMERCE CLAUSE

         The city and Riverkeeper contend that LUBA erred when it concluded that the amendments violate the dormant Commerce Clause. As discussed below, we agree.

         We will reverse a LUBA order if we determine "[t]he order to be unlawful in substance." ORS 197.850(9)(a). The city and Riverkeeper contend that LUBA incorrectly applied the law when it held that the amendments violate the dormant Commerce Clause. Thus we turn to the law. As suggested by its title, the dormant Commerce Clause is not expressly stated in the United States Constitution. The Commerce Clause provides Congress the power "[t]o regulate Commerce * * * among the several States." U.S. Const, Art I, § 8, cl 3. The dormant Commerce Clause is the negative implication of that provision, as developed through case law, that "denies the States the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce." Oregon Waste Systems, Inc. v. Department of Environmental Quality of Ore., 511 U.S. 93, 98, 114 S.Ct. 1345, 128 L.Ed.2d 13 (1994).

         The dormant Commerce Clause applies equally to state and local laws. C & A Carbone, Inc. v. Clarkstown, 511 U.S. 383, 389, 114 S.Ct. 1677, 128 L.Ed.2d 399 (1994). When applying the dormant Commerce Clause to a particular local law, "the first step *** is to determine whether [the law] regulates evenhandedly with only incidental effects on interstate commerce, or discriminates against interstate commerce." Oregon Waste Systems, Inc., 511 U.S. at 99 (internal quotation marks omitted). "Discrimination" under the dormant Commerce Clause "simply means ...


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