Judge recommends tossing fuel interests' claims against Portland fuel transport restrictions

PORTLAND, Ore. (CN) — A magistrate judge recommended on Monday to dismiss claims from the state of Montana and a number of fuel industry trade associations who are challenging fuel transport restrictions in Portland, a crucial transportation hub in the Pacific Northwest connected to railway lines and interstate highways.

A group of fossil fuel producers and distributors say in a February federal lawsuit that a 2022 Portland ordinance restricts property uses and constrains the supply of fossil fuel, thereby increasing costs and limiting available types of fuel products.

U.S. Magistrate Judge Youlee Yim You found that, for the most part, the ordinance restricting fuel transportation within city limits doesn’t violate the Commerce Clause and the Foreign Commerce Clause of the Constitution, and recommended that a federal judge grant the city’s motion to dismiss for failure to state a claim.

However, the judge also recommended against dismissing fuel distributor Christensen’s case. You found that Christensen has standing to sue based on claims of a loss of property value it says the city’s ordinance causes.

In their suit, the plaintiffs — including the state of Montana and several regional trade association groups — accuse the Portland City Council of passing amendments to the city’s land use code that imposed limits on the construction of new or expanded bulk fossil fuel terminals — which they say discriminate against interstate commerce.

The plaintiffs say in the suit that the ordinance “blocks energy companies from siting fuel export facilities at the West Coast’s fourth largest port, obstructs transport of fuel to users in other states and countries and restricts fuel transportation facilities to only that infrastructure necessary to serve its own citizens.”

Portland city leaders said they passed the ordinance to limit the risk of damage from a catastrophic Cascadia Subduction Zone earthquake by limiting the expansion of fossil fuel storage tank capacity in an area with high susceptibility to liquefaction, while allowing the existing terminals to make safety upgrades and facilitate a transition to cleaner fuels.

The judge, in her findings and recommendations, noted that plaintiffs claim that the ordinance is discriminatory because it is “designed to restrict the storage and transportation of fossil fuels in and through Portland" and to “selectively target and burden interstate and foreign commerce in a manner designed to shield local users from the impacts of the regulations.”

You said that the plaintiffs have not sufficiently argued how the ordinance discriminates against interstate commerce, and they therefore fail to state a claim under the dormant Commerce Clause. Since they have not shown any specific Congressional intent to preempt or displace local laws, they also failed to state a claim for relief under the Foreign Commerce Clause, she said.

“It is, at the very least, ‘fairly debatable’ that regulating the amount of fossil fuel storage in an area of the city that is at high-risk of catastrophic damage from an earthquake is rationally related to defendant’s interest in promoting earthquake safety,” the judge wrote.

The plaintiffs’ motion for partial summary judgment should also be denied as moot, the judge said.

You’s recommendations are being referred to a district judge, allowing objections to be filed by March 11.

Representatives for the city and the plaintiffs did not immediately respond to requests for comment.

The lawsuit is taking place while environmental advocacy groups urge city leaders to limit the expansion of a fossil fuel terminal owned by Zenith Energy. In 2016, the city voted to ban the development and expansion of all fuel facilities that hold more than two million gallons of fuel and handle fuels delivered by boat, rail or pipeline, inspired by the seismic vulnerability of the land alongside the Willamette River, according to Oregon Public Broadcasting.

That policy faced a court challenge from Western States Petroleum Association, and the Oregon Land Use Board of Appeals soon ruled that the city had the authority to enact the policy, but had to renew it regularly. A 2020 study commissioned by the city found that at least 95 million gallons of fuel could be released in a major earthquake, costing up to $2.6 billion in damages.

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