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Childers Meat Co., Inc. v. City of Eugene

Court of Appeals of Oregon

March 20, 2019

CHILDERS MEAT CO., INC., an Oregon corporation; Co-Motion Cycles, Inc., an Oregon corporation; Mid Valley Metals, LLC, a limited liability company; Gibson Steel Fabricating, Inc., an Oregon corporation; Gibson Steel Basins, Inc., an Oregon corporation;andSkopil's Cleaners, Inc., an Oregon corporation, Plaintiffs-Appellants,
CITY OF EUGENE, an Oregon municipal corporation, Defendant-Respondent.

          Argued and submitted December 11, 2017.

          Lane County Circuit Court 15CV31784; Charles D. Carlson, Judge.

          William H. Sherlock argued the cause for appellants. Also on the briefs was Hutchinson Cox.

          Lauren Sommers argued the cause and fled the brief for respondent.

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

         Case Summary: Plaintiffs, a group of businesses located within the City of Eugene, challenged the validity of Eugene's hazardous substance user fee in the city code (the fee provision) and hazardous substance reporting requirements in the city charter (the reporting program). Plaintiffs are subject to the fee provision but not the reporting program. Plaintiffs sought the following declarations from the trial court: (1) the fee provision imposes a "quantity-based" fee in violation of ORS 453.402(6); (2) the fee provision conflicts with the city charter to the extent that the fee provision defines the terms "facility" and "hazardous substance user" differently from the reporting program; and (3) the fee provision and the reporting program exempt certain public entities in violation of ORS 453.370(9). The trial court entered a judgment declaring that the fee provision does not violate [296 Or.App. 669] the statutory or charter sections identified by plaintiffs. The court did not declare whether the reporting program is valid or invalid. Plaintiffs appeal.

         Held: The trial court did not err. First, the fee provision does not violate ORS 453.402(6), because it does not impose a quantity-based fee on hazardous substance users. Second, the fee provision does not violate the city charter by defining "facility" and "hazardous substance user" differently from the reporting program. Third, the fee provision is not a "local program" subject to ORS 453.370(9). Finally, plaintiffs lack standing to seek a declaration regarding the validity of the reporting program, as opposed to the fee provision, because they are not subject to the reporting program.

         Affirmed. [296 Or.App. 670]

          SHORR, J.

         Plaintiffs, a group of businesses located within the City of Eugene (city), appeal a judgment of the trial court declaring that Eugene's "hazardous substance user fee," which was enacted by the city council in 2001 as part of the Eugene City Code (Eugene Code), is valid. Plaintiffs also challenge the validity of hazardous substance reporting requirements-part of a Toxics Right-to-Know program- enacted as an amendment to the city charter by the city's voters. We conclude that the trial court did not err when it entered a judgment declaring that the city's imposition of the hazardous substance user fee on plaintiffs does not violate ORS 453.402(6), section 2.1 and section 3.F of Amendment IV of the Eugene City Charter (Eugene Charter), or ORS 453.370(9). We also conclude that plaintiffs lack standing to challenge various exemptions to the reporting program found in Amendment IV of the Eugene Charter. Accordingly, we affirm.


         This case has a long and complex procedural background that involves amendments to the Eugene Charter, the city's constitutional document, by initiative and subsequent amendments to the Eugene Code. In 1996, the city's voters enacted Amendment IV (the initiative) to the Eugene Charter. The initiative created a "Toxics Right-to-Know" program, formed a City Toxics Board, and mandated that all "hazardous substance users" comply with annual reporting requirements. Under the initiative, a "hazardous substance user" is defined as an owner or operator of a commercial or public facility in the city with 10 or more full-time equivalent employees (FTEs) and an annual input of more than 2, 640 pounds of hazardous substance. Eugene Charter § 54(3)(F). Under article VII of the initiative, those users were required to pay an annual fee to fund the reporting program, which was to be "self-supporting" and "funded wholly by hazardous substance user fees." Id. at § 54(7)(B), (D). The initiative also contains a broadly worded severability clause, which provides:

"If any section, subsection, paragraph, phrase, or word (hereafter the parts) of this Section shall be held [296 Or.App. 671] unconstitutional, void, or illegal, either on its face or as applied, this shall not affect the applicability, constitutionality, or legality of any other parts hereof; and to that end, the parts of the Section are intended to be severable. It is hereby declared to be the intent of this Section that the same would have been adopted had such unlawful or unconstitutional provisions, if any, not been included herein."

Id. at § 54(11).

         In 1999, a group of businesses in the city challenged the validity of the initiative. Those entities argued, in part, that section VII(A) of the fee provision-which only imposed fees on "hazardous substance users" as denned by the initiative-was barred by ORS 453.402(6), under which

"[l]ocal government assessments of hazardous substance fees based on quantity *** shall be used solely to supplement and not to duplicate the State Fire Marshal's programs under ORS 453.307 and 453.414 and shall be billed and collected only through contract with the State Fire Marshal."

         Ultimately, we agreed with the businesses and held that the fee provision was invalid because it imposed a quantity-based fee-in that the fee was only imposed on entities that used more than 2, 640 pounds of hazardous substance and met other criteria-and was not used solely to supplement the State Fire Marshal's programs. Advocates for Effective Regulation v. City of Eugene, 160 Or.App. 292, 303-05, 981 P.2d 368 (1999) (Advocates I).

         On remand, the trial court severed section VII(A) of the fee provision from the initiative pursuant to the initiative's severability clause. The court held that the initiative was invalid "insofar as it requires fees to be paid only by businesses that have inputs of more than a specified quantity of hazardous substances." As a result of the court's ruling, the reporting program remained part of the initiative and all "hazardous substance users" as denned therein were still subject to the reporting requirements, but the reporting program lacked a specific funding mechanism.

         Plaintiffs appealed once more, arguing that the trial court erred in severing the fee provision rather than invalidating the initiative in its entirety. Plaintiffs argued [296 Or.App. 672] that "the voters clearly intended the Initiative to be funded by means of a quantity-based fee," which meant that the right-to-know program could not survive without such a funding mechanism. Advocates for Effective Regulation v. City of Eugene, 176 Or.App. 370, 376, 32 P.3d 228 (2001) (Advocates II). We affirmed the court's decision after concluding that the invalid quantity-based fee provision was severable from the initiative. Id. at 377. We first acknowledged that the voters adopted the initiative with the understanding that the reporting program would be funded by a quantity-based fee. But, we explained, "the raison d'etre of the initiative is the establishment of a local system of public reporting of the use of hazardous substances because exposure to those substances poses a threat to human health and the environment." Id. at 377-78. We determined that "public information, not a particular funding mechanism, is the overriding concern of the initiative." Id. at 378. We therefore presumed that "the voters would have desired severing in a manner that does the least damage to that overriding concern" and concluded that" [invalidating substantive reporting requirements constitutes a far greater interference with that purpose than does removing an offending limitation on the source of funding for it." Id. Based on our decision, the right-to-know reporting program established by the initiative remained in effect, but the initiative itself did not contain a specific funding mechanism for the program.

         Between our decisions in Advocates I and Advocates II, the city enacted a "hazardous substance user fee" as part of the city code. Eugene Code 3.690 - 3.696 (the fee provision). The city adopted the new fee provision to provide "procedures for payment by certain businesses that use hazardous substances of the hazardous substance user fees * * * in a manner consistent with article VII of amendment IV of the Eugene Charter of 2002 (the amendment), taking into consideration the mandate of the courts in the litigation involving the amendment." Id. at 3.690.

         Although the city enacted the fee provision to fund the initiative, the fee provision defines covered "hazardous substance users" and "facilities" differently from the initiative. As noted above, the initiative defines a "hazardous [296 Or.App. 673] substance user," i.e., those entities that must comply with the reporting requirements, as the owner or operator of a facility with 10 or more FTEs and an annual input of more than 2, 640 pounds of hazardous substances. Eugene Charter § 54(3)(F). The initiative defines covered facilities, in turn, as "buildings, equipment, structures and other stationary items that are located and operated on a single site or on contiguous or adjacent sites that are owned or operated by the same person(s) and relate to a common product or service," id. at § 54(3)(D), and that (1) are also within the SIC Categories of #20-#39, [1] (2) are "solid waste incinerators that accept infectious waste," and (3) are "hazardous waste disposal incinerators," id. at § 54(2.1)(A).

         Under the Eugene Code's fee provision, by contrast, a "hazardous substance user," i.e., those entities that ...

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