Portland’s Fossil Fuel Terminal Ban Upheld by Court of Appeals

On January 4, 2018, the Oregon Court of Appeals issued its decision[1] in the case brought by Petitioners Columbia Riverkeeper, Portland Audubon Society, and Center for Sustainable Economy, among others, to attempt to uphold the City of Portland's new "Fossil Fuel Terminal Zoning Amendments" adopted December 14, 2016 under Ordinance No. 188142 ("FFT Ordinance"). The FFT Ordinance would stop the expansion of existing fossil-fuel terminals and significantly limit the size of new terminals within the City of Portland. This ordinance was originally challenged by industry groups Columbia Pacific Building Trades Council, Portland Business Alliance, Western States Petroleum Association, and Working Waterfront Coalition in a case against the City of Portland before the Land Use Board of Appeals ("LUBA"). LUBA concluded in a July 19, 2017 opinion that the FFT Ordinance violates the dormant Commerce Clause (protection of interstate commerce) and that the city did not comply with Statewide Planning Goals 12 (Transportation) and 2 (Land Use Planning) when it enacted the FFT Ordinance, thereby invalidating the FTT Ordinance and nullifying any zoning code changes it requires. The Petitioners then brought this case before the Oregon Court of Appeals, which overruled LUBA on the constitutional and the Statewide Planning Goal 12 grounds, but affirmed LUBA's opinion that the city violated Statewide Planning Goal 2. The court then remanded the case to LUBA and, consequently, the city's zoning code changes mandated by the FFT Ordinance are currently not in effect.

The FFT Ordinance was in response to industry proposals in 2015 to build large fuel distribution terminals in the Pacific Northwest, including one in an industrial area of the city proposed by Pembina Pipeline Corporation. Resolution 37168, adopted by the city council on November 12, 2015, put in place the city's new policy to "actively oppose expansion of infrastructure whose primary purpose is transportation or storing fossil fuels in or through Portland or adjacent waterways," and directed the city's Bureau of Planning and Sustainability to develop zoning code changes to implement the resolution, which ultimately resulted in the FFT Ordinance. In the same vein, the city's new 2035 Comprehensive Plan, adopted in June 2016, includes Policy 6.48 (Fossil fuel distribution) to "limit fossil fuels distribution and storage facilities to those necessary to serve the regional market."

If the FFT Ordinance were to take effect, the city's zoning code will prohibit all new bulk fossil fuel terminal use in all base zones. Existing bulk fossil fuel terminal use would still be allowed to a limited extent in the industrial and general employment zones, but only to store the total amount of fossil fuel capacity that existed on January 13, 2017 (i.e., such terminals cannot expand), and they may not store coal. See Portland City Code, Section 33.140. The FFT Ordinance's definition of the term "fossil fuel" includes natural gas, but excludes petrochemicals used for non-fuel products such as fertilizers and paints. See Portland City Code, Section 33.910. Examples of bulk fossil fuel terminals that would be subject to the ban under the revised Portland City Code include terminals for crude oil, petroleum products, natural gas, and coal.

While the case is remanded to LUBA, the court's decision on the constitutional challenge removes the main hurdle faced by the city in implementing the new zoning code. It remains to be seen whether plaintiffs will take this case further by petitioning for Supreme Court review and what the city plans on doing next. But, no matter the outcome, the result is guaranteed to be controversial.


[1] 289 Or. App. 739, Case No. A165618 (January 4, 2018)