March 01, 2018

Litigating the Extent of Local Powers

David O. Bechtold

Since the passage of our nation’s landmark environmental statutes in the 1960s and 1970s, environmental attorneys have been at the forefront of mapping the limits of the federal government’s constitutional authority. Even today, we need look no further than the fervor surrounding the ongoing Clean Water Rule litigation to appreciate the role that environmental law plays in defining the scope of federal powers. In the past, those seeking additional environmental protections generally have sought to give the federal government expansive power in an effort to unify environmental protections and, in doing so, prevent state and local governments from being drawn into perceived “races to the bottom” in which local governments lower protections to attract development. Inversely, many promoting development have sought to empower state and local governments that seek to reduce regulatory hurdles.

Although most environmentally conscious organizations continue to advocate broad top-down regulation, many of these groups now have begun to effectively utilize local government authority to achieve policy outcomes that have eluded them at the federal and state levels. Most notably, climate change advocates have turned to sympathetic local governments to address greenhouse gas emissions after failing to achieve a meaningful policy win at the federal level. And while most local initiatives have, in the vein of “think global, act local,” sought to change individual behaviors by doing things such as promoting public transportation and creating bike lanes and green spaces, local governments increasingly are seeking to use their powers to target broader national and international policy outcomes. This has resulted in a fascinating wave of environmental litigation regarding the legality of local regulations. This trend will likely continue given the Trump administration’s well-publicized stance on environmental regulation and the energizing effect that the administration’s positions have had in many jurisdictions.

One recent case in my home state of Oregon, Portland Business Alliance v. City of Portland, illustrates how environmental attorneys are beginning to grapple with the limits of local authority to address national and international environmental issues. Portland’s northwest industrial district has long served as a critical petroleum terminal, with roughly 90 percent of all fossil fuel used in Oregon transported through that district. In recent years, there have been pushes to construct or expand fossil-fuel terminals in the Pacific Northwest, both to serve local need and export product to Asia. The push to establish export terminals in the Pacific Northwest has become a hot-button political issue as proponents and opponents of the terminals have clashed over what is best for the region and the planet. In 2015, the Portland City Council waded into the fray and passed Resolution No. 37168 committing the city to “actively oppose expansion of infrastructure whose primary purpose is transportation or storing fossil fuels in or through Portland or adjacent waterways.” In late 2016, Portland took a more concrete step and passed Ordinance No. 188142, amending its zoning ordinance to strictly prohibit both the construction of new bulk fossil-fuel terminals and the expansion of existing terminals. The ordinance was viewed by many as the strongest limitation on fossil-fuel infrastructure passed by a major local government in the United States.

Portland’s prohibition on the construction or expansion of fossil-fuel terminals was challenged almost immediately by various business groups. See Portland Business Alliance v. City of Portland, 2017 WL 3333014 (OR LUBA 2017). Because the challenge was to a zoning ordinance, the Oregon Land Use Board of Appeals (LUBA) had exclusive jurisdiction to hear the initial case. Grounds for the challenge included various technical land-use arguments typical in a zoning case, such as arguments that the prohibition conflicted with various other development plans. What was notable about the case was a somewhat novel argument that the city’s decision to prohibit the fossil-fuel industry’s growth in Portland violated the Dormant Commerce Clause of the United States Constitution, which limits the authority of state and local governments to discriminate against interstate commerce.

In striking down the ordinance in violation of the Dormant Commerce Clause, LUBA followed a two-tiered analysis laid out in federal case law that applies an elevated level of scrutiny in cases where “a state or local law directly regulates or facially discriminates against interstate commerce, or when its purpose or practical effect is to favor in-state economic interests over out-of-state interests.” Id. at *24. After significant factual investigation, LUBA concluded that Portland’s ban had a discriminatory effect on interstate commerce and went on to find that while the city’s asserted reasons for the ban—reducing vulnerability to earthquakes and addressing climate change—were legitimate local interests, the city failed to show that “adequate, nondiscriminatory methods are unavailable to meet those interests.” Id. at 31.

LUBA’s decision was appealed to the Oregon Court of Appeals, where the court upheld LUBA’s determination that the ordinance violated various land use laws but reversed the determination that the ordinance violated the Dormant Commerce Clause. Specifically, the court found that the ordinance’s requirements neither prohibited fuel exports to or through the city, nor created a scenario in which similarly situated in-state and out-of-state petroleum refiners and distributors were treated differently. Columbia Pac. Bldg. Trades Council v. City of Portland, 289 Or. App. 739, 750 (2018). The court did not assess the ordinance’s impact on in-state versus out-of-state petroleum consumers. The appeals court focused primarily on the ordinance’s regulation of the size and growth of infrastructure, while LUBA focused more on the intent behind those regulations, which appeared to have been prevention of the expansion of an industry in the region. The plaintiffs have sought reconsideration of the decision from the appeals court, and it is likely that the Oregon Supreme Court will be asked to review the case.

It is beyond the scope of this article to explore LUBA’s decision in depth, but the upshot of the decision is that those seeking to utilize local powers to achieve environmental policy goals, particularly policies driven by broad environmental concerns such as climate change, need to consider whether their actions discriminate (intentionally or unintentionally) against interstate commerce. Similar cases likely will crop up across the county as numerous local governments look to fill the perceived regulatory gap created by the Trump administration’s stance toward climate change.

While Portland’s terminal ban has resulted in a published legal decision regarding the limit of local powers to address issues of global environmental importance, the news over the past year has been full of similar efforts that have yet to reach a litigated conclusion. For example, Whatcom County, Washington, which is home to two of the Pacific Northwest’s five oil refineries, has publicly voiced environmental and safety concerns about the region being used to export fossil fuels to Asia. As a result, the county has passed three successive six-month bans on unrefined fossil-fuel exports. The county also has hired an outside law firm to study the question of what the county legally can do to regulate the export of crude from terminals located within the county on a permanent basis. If made public, the report should provide a unique look into what powers counties believe they have to achieve a policy goal that seemingly requires regulation of interstate commerce. To date, no litigation has been filed in Whatcom County, but given the county’s apparent interest in a permanent ban on crude exporting, it certainly will be an interesting case to watch.

Local government bans aimed at the petroleum industry have become somewhat common along the West Coast, but the phenomenon is not limited to petroleum. Again, taking Oregon as an example, in the past two years the state has seen local governments ban commercial water bottling (Hood River County), the use of aerial pesticides on commercial timberlands (Lincoln County), and the use of the genetically modified crops (Josephine County). Many of these bans are the result of ballot initiatives, even as county commissioners have voiced concern over the legality of the bans. Several such bans have resulted in litigation, generally with courts finding that the local bodies lack authority to regulate in the targeted arena. See, e.g., White, Jr. v. Josephine County, 2016 WL 9735577 (Or. Cir. 2016) (county ordinance banning genetically modified plants was preempted by state law; decision upheld without opinion by the Oregon Court of Appeals, 287 Or. App. 888 (2017)). Although courts have held on several occasions that local governments have exceeded their powers, local governments do have some power to regulate environmental issues. In the coming years, it is expected that environmental lawyers will continue to be called upon to assist in mapping the extent of local government authority. This presents an exciting opportunity for practitioners in our specialized area of law to be on the front lines of resolving a complicated question at the core of our federalist system of government.

David O. Bechtold

Mr. Bechtold is an attorney specializing in environmental litigation at Northwest Resource Law PLLC in Portland, Oregon, and is a member of the editorial board of Natural Resources & Environment. He may be reached at dbechtold@nwresourcelaw.com.