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Recent rulings show dynamic nature of Oregon planning law

Reposted from the Daily Journal of Commerce.

Two cases decided in the past month illustrate the scope and importance of planning law in Oregon. While neither decision is final until all appeal opportunities have been exhausted, these cases are significant regardless of their outcome.

We commented recently on a Land Use Board of Appeals (LUBA) decision that raised many eyebrows. The city of Portland listened to the environmental community and enacted an ordinance to limit the expansion of existing fossil fuel terminals and limit the size of new such terminals within the city limits. A coalition, including business and labor groups and oil company representatives, lined up to oppose the ordinance, while environmental groups supported the city. To the surprise of many observers, LUBA invalidated the ordinance, finding it violated two statewide planning goals. Some shrugged, as it appeared these deficiencies could be cured.

The surprise was that LUBA also invalidated the ordinance because it violated the “dormant commerce clause” – i.e., a negative inference that, because the Constitution allows the federal government to regulate commerce, it also denies states the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce. If a state or local government unjustifiably favors in-state commercial interests over out-of-state ones, as LUBA found in this case, there is a constitutional violation and the ordinance cannot stand.

Upon review, the Oregon Court of Appeals disagreed, finding no discrimination against out-of-state exporters as opposed to in-state ones. The end result of constricting terminal capacity, which might also affect in-state users, was a matter of policy, but it was not unconstitutional. Oregon has no in-state exporters or distributors of fossil fuels in any event and, as a result, could not discriminate against them. Moreover, the ordinance recognized and allowed existing fossil fuel terminals and those necessary for distribution of those products for retail gas stations, and terminals built for distributors and wholesalers that receive and deliver fuel solely by trucks to continue.

Finally, the court said that nondiscriminatory local laws regulating commerce in an evenhanded manner to effectuate a legitimate local interest that have only “incidental” effects on interstate commerce are valid unless “the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.” The local interests included public safety concerns over a fossil fuel terminal in an earthquake subduction zone, as well as climate change concerns. Moreover, the court found burden on commerce to be comparatively minimal.

The second significant case came from LUBA and dealt with a buildable lands inventory adopted by the city of Eugene to ensure sufficient residential land availability over a 20-year period to construct “needed housing.” The Home Builders Association of Lane County (HBA) claimed the city did not designate sufficient buildable lands because some of the land included in the inventory would be problematic to develop. The HBA claimed that some of the land probably could not be developed under “clear and objective conditions,” which were required to allow development of “needed housing.”

LUBA found that the inventory step required the city to include land that was “suitable, available and necessary” for residential development, even if those lands could not be developed easily or under clear and objective conditions. The city also used a calculation of land historically developed outside the clear and objective category with its actual development figures.

The case is significant because LUBA interpreted the housing laws to inventory all housing lands, then allow for discounting those lands that are constrained by applicable development regulations that reduce the number of available units, then calculate the net housing units needed over a 20-year period, and finally to plan and zone sufficient lands to meet those needs.

The HBA’s attempt to increase the amount of land needed for housing by excluding constrained (but otherwise available) lands failed. The result of this decision is to make efforts to include land fully available for needed housing a bit more contentious, a bit longer, a bit easier for supporters of housing exclusion and somewhat more discouraging for housing advocates.

As we mentioned, both decisions are appealable at the time of this writing, but both decisions have impacts. Local governments may be able to ban or limit fossil fuel plants within their boundaries, and larger cities may be able to undertake their buildable land inventories by starting with all lands available for housing. Another court may change these results or the Legislature may weigh in with other priorities, but these cases represent the law – for the moment.

Edward Sullivan is a retired practitioner of land use and municipal law for more than 45 years. Contact him at esulliva@gmail.com.

Carrie Richter is an attorney specializing in land use and municipal law at Bateman Seidel. Contact her at 503-972-9903 or crichter@batemanseidel.com