The Oregon Court of Appeals ruled Thursday that the Portland City Council did not violate the U.S. Constitution with a 2015 resolution that banned new fossil fuel terminals.

The court reversed a significant portion of an Oregon Land Use Board of Appeals ruling, which found the ban unconstitutional.

Portland’s use of zoning laws to ban the construction and expansion of fossil fuel terminals matters for a couple reasons.

In Oregon, tanks located in North Portland supply about 90 percent of the fossil fuels used statewide.

Nationally, the ordinance also tested a new strategy for left-leaning cities that want to limit fossil fuel use as a way to combat climate change.

“Other cities were looking to the city of Portland and what they had done as a potential model for other ordinances,” said attorney Maura Fahey with the Crag Law Center.

The Crag Law Center helped defend the ordinance on behalf of local environmental groups that supported it, including Oregon Physicians for Social Responsibility, the Center for Sustainable Economy, Columbia Riverkeeper and the Audubon Society of Portland. 

The groups welcomed the Oregon appeals court ruling, which held that Portland’s fossil fuel terminal ban does not violate the constitution’s protection of interstate commerce.

“This big federal issue could have been potentially damaging to efforts against climate change throughout the country,” Fahey said.

Industry groups, including the Columbia Pacific Building Trades Council and the Western States Petroleum Association had sued to block the ordinance, with initial success before the Oregon Land Use Board of Appeals.

Their attorneys argued that the ordinance in effect discriminated against out-of-state fossil fuel refineries and distributors in favor of in-state purchasers of fossil fuel. Attorneys for the industry groups said the rule violated the so-called “dormant commerce clause” of the Constitution.

But the appeals court rejected that argument, noting that violations of the dormant commerce clause require discrimination “between substantially similar out-of-state and in-state economic entities.” Oregon has no in-state fossil fuel refineries or distributors that benefit from Portland’s zoning code amendments. 

Industry groups said in a statement they were disappointed in the appeals court decision.

“The fossil fuel zoning ordinance is not only a violation of Oregon and Portland city land use laws, but punishes consumers and businesses in the city and throughout Oregon, who rely on affordable fuel to power their homes, their businesses and the economy,” said Oyango Snell, general counsel for the Western States Petroleum Association.

The industry groups have not said whether they will seek a review of the decision by the Oregon Supreme Court. 

On a separate legal issue, the appeals court found the fossil fuel ban failed to comply with a state land use regulation, and upheld the LUBA’s ruling.  

The court held that the city council did not have adequate factual support for one of the key findings it cited in creating the ban: that fossil fuel use “may plateau and decline.” The appeals court noted that trend-based forecasts cited by the city actually predicted flat or moderately increasing demand for fossil fuels.

Portland Mayor Ted Wheeler has expressed his support for the fuel terminal ban, and the City Council could potentially address the state-level problems with the ordinance through new legislation.

“Portland’s fossil fuel infrastructure policies align with our climate, health, safety, and air quality goals, and will help us achieve a transition to 100 percent renewable energy community-wide,” Wheeler said in a statement.