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Under Oregon law, any state agency action affecting land use must be accomplished 鈥渋n a manner compatible with acknowledged comprehensive plan and land use regulations.鈥� Similarly, Land Conservation and Development Commission (LCDC) rules require agencies to adopt state agency coordination programs to ensure compliance with the statewide goals. This is generally achieved by requiring that any activity relating to land use that requires a permit 鈥渂e compatible鈥� with acknowledged local comprehensive plans and land use regulations.

Although state agencies can conduct the necessary compatibility review, they most often defer to local governments by asking applicants to secure a check-the-box template for completion. This is known as a land use compatibility statement (LUCS). For example, the Department of Environmental Quality (DEQ) LUCS template includes the following check-the-box options: 鈥淵es, the activity or use is allowed outright by (provide reference for local ordinance),鈥� followed by a small area for explanation. Where the answer is 鈥渘o,鈥� the same single line for 鈥渆xplanation鈥� is provided. Although additional pages of analysis can be attached, this template illustrates that LUC review is most often an administrative one accomplished by local planning staff checking the appropriate box that the use is permitted or not under the existing land use scheme with little more.

Also interesting about a LUCS decision is that where a local government checks the box that the use is consistent with the local comprehensive plan, because future land use review has been secured or is unnecessary or will be obtained, the decision is not a land use decision eligible for review by the Land Use Board of Appeals (LUBA). Yet, when the LUCS is denied for lack of compatibility, LUBA retains jurisdiction to provide review. Whether this lack of a reciprocal right to an evaluation by LUBA is appropriate given that LUBA would review the local government determination to authorize the use or to adopt a land use scheme authorizing uses providing an avenue for review, this structure serves to deprive environmental advocates access to LUBA to challenge approvals for use like liquid natural gas pipelines in cases where the 鈥測es, allowed鈥� box is checked.

This fairly cumbersome scheme for ensuring that agency authorizations are in compliance with local land use plans may have gotten more complicated as a result of LUBA鈥檚 recent ruling in Zenith Energy Terminal Holdings LLC v City of Portland. By way of backstory, this case represents Portland鈥檚 third attempt to limit fossil fuel terminals within the city. At least 90 percent of the fossil fuel serving Oregon is stored in, or transported through, Portland鈥檚 northwest industrial area, which is in a moderate to high-risk earthquake liquefaction zone. In 2016, the city adopted an ordinance prohibiting new bulk fossil fuel terminals on a citywide basis and limiting the future expansion of the existing terminals. On appeal, LUBA remanded this decision and the Oregon Court of Appeals affirmed. The city tried again in 2019, but this effort similarly failed in an appeal to LUBA.

In 2021, petitioner Zenith Energy filed an application for a LUCS as necessary for renewal of its DEQ air quality permit. The subject 42-acre property located on industrial-zoned land in northwest Portland has been used since 2006 as an asphalt refinery. In 2017, the petitioner acquired the property and intensified the operation to include the storage and transfer of crude oil. These intensified activities, permitted under Portland zoning regulations, led DEQ to require the petitioner to renew its DEQ air quality permit. The Portland Bureau of Development Services director issued the LUCS, concluding that the petitioner鈥檚 activities were not compatible with various provisions of the city鈥檚 comprehensive plan, known as the 2035 Plan. This decision included four pages of findings identifying plan policies that it deemed incompatible with the use.

On appeal to LUBA, the petitioner argued that the city was precluded from considering 2035 Plan policies in its LUCS review because the use is permitted outright and because the local zoning regulations do not contemplate consideration of the plan when reviewing a proposal for such a use. The city (and environmental groups that intervened) argued that the compatibility statute and rules require an evaluation of the comprehensive plan as well as any implementing ordinances. In other words, the fact that the petitioner鈥檚 use may be allowed outright under the existing zoning does not negate the city鈥檚 obligation to determine compatibility with the plan. This is important because land use in Oregon is premised on the notion that zoning regulations must be consistent with and implement the comprehensive plan. This explains why the comprehensive plan does not generally apply to uses that are permitted outright. The petitioner relied on this 鈥渘ecessarily compatible鈥� obligation to argue that the city cannot now take the position that the comprehensive plan requires something more.

LUBA agreed with the city explaining that any misalignment was the result of timing. The petitioner鈥檚 LUCS request came at a time when the 2035 Plan had taken effect but had yet to be implemented through zoning. Yet this misalignment did not negate the state agency obligation of ensuring that its permits are compatible with the local comprehensive plan.

The petitioner went on to argue that the city鈥檚 findings were inadequate. Although the parties agreed that nothing in the LUCS structure requires a local government to adopt written findings explaining its decision, LUBA held that as a quasi-judicial decision focusing on an individual property, written findings in support of the decision were required. Although the city鈥檚 four pages of findings did quote certain plan policies directed to climate change, transitioning to renewable energy, hazard prevention and impacts to historically marginalized groups, the city failed to explain why the use was necessarily incompatible with those policies.

Appropriate findings, LUBA explained, must explain why the use is 鈥渘ot allowed under鈥� the 2035 Plan. The city must explain how plan policies that appear to be 鈥渉ortatory or aspirational鈥� are 鈥減rohibitory鈥� in nature such that the petitioner鈥檚 use is 鈥渘ot allowed鈥� under the plan. LUBA went on to point out that the compatible means 鈥溾�榗apable鈥� or existing 鈥榳ithout discord or disharmony.鈥欌�� It is not clear how the city will successfully accomplish this demanding task on remand. It may be that this burden proves too onerous and this effort, like its two previous efforts, will fail.

Whether further review by the Court of Appeals will alter this result is not yet known, but if this decision becomes binding precedent, it may place new or existing uses requiring agency permits, or renewals of the same, at risk for uses that politicians deem unsuitable. Permits issued by state agencies, and the associated LUCS, are quite common for a wide range of uses such as liquor permits from OLCC, air quality or water quality permits from DEQ, or a wetland fill permit from DSL. Will local governments begin to stand in the way of agency permit renewals for uses deemed inappropriate based on their comprehensive plan? Will advocacy groups start lobbying elected officials for the same? Would hearings be required if a denial is a possible outcome? Although these questions are not known, it is clear that the existing check-the-box template is insufficient. Local governments now have a much heavier burden for explaining a denial.

Edward Sullivan is a retired practitioner of land use and municipal law with more than 50 years of experience. Contact him at [email protected].

Carrie Richter is an attorney specializing in land use and municipal law at Bateman Seidel. Contact her at 503-972-9903 or [email protected].

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the authors and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither of the authors nor the 91视频 guarantees the accuracy or completeness of any information published herein.