In the late 1960s, British speculative fiction author John Brunner wrote two page-turner novels (The Sheep Look Up, and Stand on Zanzibar) as warnings that easily rank with 1984 and Brave New World for prophetic power and importance.  There has not been a week since the onset of the 21st Century that these two prescient novels have not seemed to have been turned into scripts.

Indeed, ProPublica, a vital new outlet for journalism for the public interest, recently ran an exposé demonstrating that, not only have we Americans ignored Brunner’s warnings we seem to have used them as instruction manuals.

Eisenhower’s Warning Ignored

How the Pentagon’s Handling of Munitions and Their Waste has Poisoned America

by Abrahm Lustgarten, ProPublica
Issued 19 July 2017

     There’s a famous quote, attributed to Lincoln, that “The Constitution is not a suicide pact” — meaning, of course, that the Executive Branch can always justify ignoring the Constitution by saying that to follow it would be so harmful to the nation as to amount to suicide.

     That quote comes to mind when reading the Oregon Land Use Board of Appeals (LUBA) recent decision striking down the City of Portland’s kinda-sorta ban on fossil fuel terminals (FFTs). Portland’s ban was only kinda-sorta because it was designed so that it would not impede the use of fossil fuels by Portlanders or Oregonians in the slightest. It was primarily virtue signaling to the world as written, allowing Portlanders to continue to enjoy the use of fossil fuels unimpeded, while erecting a slight barrier — not even a speed bump — to the export of fossil fuels from facilities in Portland.

     Which is why LUBA struck it down under the arcane branch of Constitutional analysis known as “dormant Commerce Clause” jurisprudence.

     To review, recall that the US Constitution’s Commerce Clause says that only Congress can regulate interstate commerce. Of course, forming a single “free trade zone” within the 13 post-Revolutionary states was — along with ensuring that the wealthy individuals who bought debt and scrip to fund the Revolution were paid, come hell or high water — a major reason that the interests represented in Philadelphia insisted on forming a new federal system of government and junking the Articles of Confederation.

     But it wasn’t long before this clear grant of authority ran into some other Philadelphia lawyering, where states would pass laws that were little more than ways to get around Congress’s authority over interstate commerce. Which is why the Supreme Court invented the “dormant Commerce Clause,” finding that the Commerce Clause also included a power, dormant within it, to smack down any attempts by states to game the system so as to benefit the home team in a way that appeared to be completely neutral.

     The problem for the present moment is that this kind of analysis  — which is 100% legally sound when applied to trade in the ordinary sorts of goods that first shape and then eventually shackle the thinking of the law students who become judges later — means that no state can serve as a laboratory of environmental sanity and experiment with ways to address planetary scale threats to human civilization if Congress won’t. And a bought and sold Congress dominated by corporate interests won’t. Ever.

     Thus, given the nature of the US Senate, where Wyoming, with its sparse population and abundant coal deposits, has the same number of Senators as California, the upshot is that Lincoln was quite wrong and, alas, the Constitution is indeed a suicide pact. Not because it leaves us vulnerable to insurrection but because it means that only those environmental actions that can win approval in states such as Wyoming and Oklahoma are possible.

    That such actions are inconsistent with the continued presence of human civilization on Earth beyond this century is simply more evidence that using an 18th Century framework for facing 21st Century threats is bound to end in tears and suffering. And so it goes.

    Here is how this suicidal analysis goes (taken from the LUBA final opinion in the recent decision.

NINTH ASSIGNMENT OF ERROR

              In the ninth assignment of error, petitioners argue that the FFT amendments violate the dormant Commerce Clause of the United States Constitution because the ordinance impermissibly discriminates against or unduly burdens interstate trade in fossil fuel.For the following reasons, we agree with petitioners.

              The Commerce Clause of the United States Constitution provides that “Congress shall have Power * * * [t]o regulate Commerce * * * among the several states.” US Const Art I, § 8, cl 3.Where Congress has explicitly exercised that grant of power, states are of course bound to conform to federal law. The “dormant” aspect of the Commerce Clause protects Congress’s latent ability to regulate interstate commerce, even in areas where Congress has not spoken, by prohibiting states (including the municipal arms of a state) from adopting legislation that, by design or effect, regulates or burdens interstate commerce in certain impermissible ways. Or. Waste Sys. v. Dep’t of Envtl.Quality, 511 US 93, 114 S Ct 1345 (1994); Fort Gratiot Sanitary Landfill v.Michigan Dep’t of Natural Resources, 504 US 353, 361, 112 S Ct 2019 (1992) (“[A] State (or one of its political subdivisions) may not avoid the Commerce Clause’s strictures by curtailing the movement of articles of commerce through subdivisions of the State, rather than through the State itself.”)

              The courts have generally adopted a two-tiered approach to Commerce Clause challenges: When 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, courts have generally struck down the law without further inquiry, under an elevated level of scrutiny. Rocky Mt. Farmers Union v. Corey, 730 F3d 1070, 1087 (9th Cir 2013) (a law may violate the dormant Commerce Clause if it “discriminates against out-of-state entities on its face, in its purpose, or in its practical effect[.]” (citing Maine v. Taylor, 477 US 131, 138, 106 S Ct 2440 (1986))). Discrimination “means differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter.” Id. (quoting Or. Waste Sys., Inc., 511 US at 99). Where a law is discriminatory in practical effect, the government must demonstrate that the law is supported by a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives. Hunt v. Wash. State Apple Adver. Comm’n, 432 US 333, 353, 97 S Ct 2434 (1977) (“When discrimination against commerce of the type we have found is demonstrated, the burden falls on the State to justify it both in terms of the local benefits flowing from the statute and the unavailability of nondiscriminatory alternatives adequate to preserve the local interests at stake.” (Internal citations omitted.)).

              On the other hand, where the law is facially non-discriminatory, and does not discriminate against out-of-state economic interests in its purpose or practical effect, the courts engage in a balancing test, subject to a lesser level of scrutiny, that weighs the state’s interest against the indirect burden on interstate commerce. Such a law will only be struck down when the burden on interstate commerce is “clearly excessive” in relation to the local benefits. Pike v. BruceChurch, 397 US 137, 142, 90 S Ct 844 (1970).

              Petitioners argue, and we agree, that the city’s FFT amendments fail the Commerce Clause analysis under either test.

  1. Discriminatory Purpose or Practical Effect

              In the present case, no party argues that the FFT amendments facially discriminate against interstate commerce. The FFT amendments are silent regarding the origin or final destination of fossil fuels stored or transloaded in the affected FFTs. Petitioners argue, however, that it is clear from the record that one of the purposes of the amendments, if not the primary motivating force, was to forestall the possibility that a particular vehicle of interstate and international commerce—fossil fuel export terminals—would be established within the city. The apparent impetus for the FFT amendments was a recent proposal to site a propane export terminal in a north Portland industrial area, the Pembina proposal. As the city mayor explained in the proceedings leading to adoption of the FFT amendments:

“The rapid development of fossil fuel resources in the western part of our country and Canada has put a lot of pressure on Portland and other cities and has sought to transport and move huge quantities of fossil fuels through and into our communities. As we all experienced with the [P]embina proposal last year, the zoning code actually allows fossil fuel terminals as a warehouse and freight movement use in our zoning code today without any limit on the size of these terminals. We, of course, passed [Resolution 37168] saying we’re going in a different direction and today is the proposal to put that into city law, into our code.” Record 206.

The Pembina proposal in north Portland was ultimately abandoned in the face of significant local opposition. However, as the mayor notes, one consequence of the Pembina proposal was adoption of Resolution 37168, which resolved that the city council would actively oppose expansion of infrastructure whose primary purpose is the transporting or storing of fossil fuels in Portland or adjacent waterways. The city council later adopted a new comprehensive plan policy, Policy 6.48, which states that the city’s policy is to “[l]imit fossil fuel distribution and storage facilities to those necessary to serve the regional market.” Record 3317.

              Even though Policy 6.48 is not yet in effect, the city’s findings state that the FFT amendments “specifically implement[]” Policy 6.48. Record 324. As adopted, the FFT amendments have the practical effect of precluding the siting of new fossil fuel export terminals within the city, and indeed it is clear that the city intended that result.28

28 As noted earlier, the city’s findings explain:

“The energy distribution market in the Pacific Northwest is changing. Production of crude oil and natural gas, particularly from North Dakota, has substantially increased in the U.S. since 2009, as shown in Figure 1. In turn, several large new fuel distribution terminals have been proposed in the Pacific Northwest to access West Coast and export markets, as shown in Figure 2. Similar trends have occurred in Alberta and British Columbia.

[The FFT amendments] propos[e] a prompt, focused response to these market changes. The recommended code amendments will restrict development of new fossil fuel terminals and limit the expansion of existing terminals, consistent with City and State objectives on climate change and public safety.” Record 316 (emphasis added).

Notwithstanding the facial neutrality of the amendments regarding the origin or destination of fossil fuels, it is clear that the city intended the amendments to preclude construction of new or expanded terminals that store and transload fossil fuels to serve interstate or international markets, such as the Pembina proposal (i.e., demand beyond that “necessary to serve the regional market.”).As the commentary to the definition of “Bulk Fossil Fuel Terminal” explains, terminals subject to the FFT amendments function as “regional gateway facilities, where fossil fuels enter and exit the region.” Record 370. Further evidence of the intent to preclude fossil fuel export terminals is the fact that the size of terminals subject to the amendments was deliberately set to capture facilities large enough to handle “unit trains,” i.e., trains with a single load of a bulk fossil fuel that is transported as a unit and not intended for local distribution, but for transloading for more distant markets. See n 6.In the amendments, the city implements Policy 6.48 and attempts to freeze the status quo, in which the city’s existing FFTs serve only local, regional and intrastate markets for fossil fuels.29

29 It is true, as the city argues, that nothing in the FFT amendments expressly prohibits changing the 11 existing large FFTs into export terminals, i.e., using existing facilities to store and transship fossil fuels to interstate or international markets, rather than store and transship fossil fuels for local or regional markets, as is the current state of affairs. However, the city cites no evidence that such redevelopment would be a practical or economic reality. Such changes would likely require new facilities and changes in modality, e.g., shifting from a train to truck modality to a train to ship modality, and perhaps different fuels (e.g., petroleum to coal) with different storage and handling characteristics. It seems unlikely that it would be economically feasible to abandon long-standing investments in existing facilities serving local and regional markets in order to redevelop those facilities to handle different modalities or types of fossil fuels.

              The question before us is whether legislation with that intent and that practical effect is consistent with the dormant Commerce Clause. The parties cite a number of dormant Commerce Clause cases, discussed below, to support their respective positions. Before turning to that discussion, we first note that the city emphasizes that the stated purposes of the FFT amendments include (1) addressing safety issues stemming from vulnerability of many existing FFTs to seismic events in the city’s northwest industrial area, and (2) reducing the city’s contributions to climate change. The city argues that these are legitimate local interests that outweigh any incidental impact on interstate commerce. We address the cited purposes below, both under the discriminatory practical effect analysis, and under the Pike balancing test. However, in evaluating discriminatory purpose or practical effect, we note that the Ninth Circuit states that it will “assume that the objectives articulated by the legislature are the actual purposes of the statute, unless an examination of the circumstances forces us to conclude that they could not have been a goal of the legislation. But we will not be bound by the stated purpose when determining the practical effect of the law.” Rocky Mt. Farmers, 730 F3d at 1097-98 (citing Minnesota v. Clover Leaf Creamery, 449 US 456, 463 n 7, 101 S Ct 715 (1981); Hughes v. Oklahoma, 441 US 332, 336, 99 S Ct 1727 (1979) (internal citations and quotation marks omitted)).Similarly, in the present case, even if the two purposes stated above are among the actual purposes of the FFT amendments, it does not follow that they are the exclusive purposes, or that those two stated purposes limit the analysis of the practical effect of the FFT amendments.

              We make one other preliminary observation. Most of the dormant Commerce Clause cases cited to us involve claims of economic protectionism in one guise or another. The present case does not involve economic protectionism in the classic sense of a state or municipality trying to favor local economic interests by restricting or burdening competition from out-of-state actors. See, e.g., Hunt v. Wash. State Apple Adver. Comm’n, 432 US 333, 351 (regulations that burdened out-of-state apple growers, to the indirect economic benefit of in-state growers). The city, and Oregon, have no local refineries or sources of fossil fuel to promote or protect against competitors. Nonetheless, we believe that the FFT amendments embody elements of economic protection for local interests—protections from the burdens that the city is willing to impose on interstate commerce—and the city’s attempt to shield local interests from the burden of obstacles it places in the path of interstate commerce is one of the fatal flaws of the FFT amendments. Raymond Motor Transportation,Inc. v. Rice, 434 US 429, 445-47, 98 S Ct 787 (1978) (exceptions in favor of local interests “weaken the presumption in favor of the validity of [a regulation], because they undermine the assumption that the State’s own political processes will act as a check on local regulations that unduly burden interstate commerce.”)

              In the FFT amendments, the city attempts to limit its participation in the traffic of fossil fuels, which the city clearly deems to be an undesirable commodity. The city is indifferent to the sources of that commodity (none of which are local), but is concerned with the ultimate destinations for fossil fuels that enter the city for storage or transloading.As Policy 6.48 indicates, the city’s policy goal is to limit fossil fuel storage and transloading to the quantities needed to meet local and regional demands. The concomitant (and expressly-stated) goal is to preclude establishment or expansion of FFTs that would store or transload fossil fuel for destinations outside the state. Because the status quo at present is that the city’s FFTs adequately serve current local and regional demands, the city chose to advance both these policy goals together by simply prohibiting new and expanded FFTs. To shield local users from the consequences of a more comprehensive ban on new or expanded FFTs, the city adopted a number of exceptions and exclusions, listed in the margin.30

30 PCC 33.920.300.D. lists exceptions to the definition of “bulk fossil fuel terminal,” (FFTs) many of which appear calculated to shield local fossil fuel storage facilities and end users from harm that could otherwise be inflicted by the FFT amendments. The exceptions include:

“2. Truck or marine freight terminals that do not have transloading facilities and have storage capacity of 2 million gallons or less are classified as Warehouse and Freight Movement uses. However, multiple fossil fuel facilities, each with 2 million gallons of fossil fuel storage capacity or less but cumulatively having a fossil fuel storage capacity in excess of 2 million gallons, located on separate parcels or land will be classified as a Bulk Fossil Fuel Terminal when two or more of the following factors are present:

“a. The facilities are located or will be located on one or more adjacent parcels of land. Adjacent includes separated by a shared right-of-way;

“b. The facilities share or will share operating facilities such as driveways, parking, piping, or storage facilities; or

“c. The facilities are owned or operated by a single parent partnership or corporation.

“3. Gasoline stations and other retail sales of fossil fuels are not Bulk Fossil Fuel Terminals.

“4. Distributors and wholesalers that receive and deliver fossil fuels exclusively by truck are not Bulk Fossil Fuel Terminals.

“5. Industrial, commercial, institutional, and agricultural firms that exclusively store fossil fuel for use as an input are not Bulk Fossil Fuel Terminals.

“* * * * *

“7. The storage of fossil fuels for exclusive use at an airport, surface passenger terminal, marine, truck or air freight terminal, drydock, ship or barge servicing facility, rail yard, or as part of a fleet vehicle servicing facility are not Bulk Fossil Fuel Terminals.

“8. Uses that recover or reprocess used petroleum products are not Bulk Fossil Fuel Terminals.”

The net effect is that the city has done all it can, short of an express prohibition on export terminals, to effectively restrict interstate or international commerce in fossil fuels, while at the same time shielding its citizens and local end-users to some extent from the adverse consequences of the restrictions on new or expanded terminals.31

31 The city’s ability to significantly impact interstate and international commerce in fossil fuels is, of course, limited. Export terminals can still be located in other cities throughout the region. Indeed, as the findings note, at least eight export terminals have been proposed in the region in places other than Portland. Record 317. Nonetheless, as Ordinance No. 188142 recognizes, the city enjoys several geographical and logistical advantages, including a location at the western end of a low-gradient railroad and barge route for heavy cargo through the Cascades, a corridor that is an economical conduit for fossil fuels from interior states for transshipment to overseas destinations. Record 48. Few other cities in the region are as well-placed as Portland to disturb the flow of fossil fuels in interstate commerce.

While not a classic form of economic protectionism vis-a-vis out-of-state competitors, in our view a law that embodies the above goals represents a species of protectionism and burden-shifting that infringes on Congress’s latent authority under the Commerce Clause. Pac. Merch. Shipping v. Goldstene, 639 F3d 1154, 1177 (9th Cir 2011) (“[T]he whole objective of the dormant Commerce Clause doctrine is to protect Congress’s latent authority from state encroachment.”)

              With those observations, we turn to the cases cited by the parties. Dormant Commerce Clause jurisprudence is highly fact-specific, and the analysis often turns on identifying the most analogous fact patterns. In general, the cases cited by the city are distinguishable.The city relies heavily on Chinatown Neighborhood Ass’n v. Harris, 794 F3d 1136 (9th Cir 2015), in which the United States Court of Appeals for the Ninth Circuit upheld the State of California’s “Shark Fin Law,” which made it unlawful for any person to possess, sell, trade, or otherwise distribute shark fins anywhere in the state. The plaintiffs argued that the law violated the dormant Commerce Clause by curbing commerce in the flow of shark fins through the state to out-of-state markets. Id. at 1145. The Ninth Circuit rejected that argument, concluding that the law simply regulates conduct within the state, and any extraterritorial impacts of the law are incidental. Id. at 1146. The city argues for the same conclusion here: the FFT amendments simply regulate conduct within the state, and any extraterritorial impacts are incidental.

              However, a critical difference between the present case and Chinatown Neighborhood Ass’n, is that in the latter case the state law did not purport to shield state residents from the impacts of an otherwise comprehensive prohibition. We believe it doubtful that the Ninth Circuit would have affirmed a statute that allowed state residents to possess, sell, or trade shark fins, and thus protected the existing domestic market in shark fins, but had the intent and effect of restricting the storage or transport of shark fins for interstate or international markets.32

32 Another significant difference is that in Chinatown Neighborhood Ass’n, the Ninth Circuit noted that Congress had adopted legislation prohibiting “finning” or the taking of shark fins in all U.S. waters. Id. at 1140. Thus, the state law prohibiting the possession, etc., of shark fins of any origin within the state was entirely consistent with federal legislation. Id. at 1144. Indeed, the Ninth Circuit first had to determine whether congressional legislation had already preempted or occupied the field of shark finning. Id. In the present case, as far as we are informed Congress has passed no law restricting interstate or international commerce in fossil fuels. If anything, it is more probable that federal statutes foster the free flow of fossil fuels in interstate (and international) commerce. See Raymond Motor Transp., Inc., 434 US at 440 (“[I]t never has been doubted that much state legislation, designed to serve legitimate state interests and applied without discrimination against interstate commerce, does not violate the Commerce Clause even though it affects commerce. In areas where activities of legitimate local concern overlap with the national interests expressed by the Commerce Clause—where local and national powers are concurrent—the Court in the absence of congressional guidance is called upon to make delicate adjustment of the conflicting state and federal claims.” (Internal citations and quotation marks omitted.)); see also Pac. Merch. Shipping Ass’n, 639 F 3d at 1178 (“The foreign commerce context places further constraints on state power because of ‘the special need for federal uniformity.’”).

Similarly, in the present case, we think the Ninth Circuit would not affirm regulations that are intended and have the practical effect of prohibiting the storage or transloading of fossil fuel for interstate and international markets, but which largely protect the local fossil fuel economy and local end-users from the impacts of those regulations.

              Another Ninth Circuit case cited by the city, Rocky Mt. Farmers Union v. Corey, 730 F3d 1070, is also distinguishable. In Rocky Mt. Farmers Union, the California Air Resources Board adopted a low carbon fuel standard regulation for ethanol, an additive in fossil fuel. Id. at 1079-83. To comply with the fuel standard, a fuel blender had to keep the average carbon intensity of its total volume of fuel below the fuel standard’s annual limit, taking into account various credits available under a cap-and-trade scheme. Id. Out-of-state suppliers filed suit, arguing that the fuel standard violated the dormant Commerce Clause. Id. at 1086. The district court concluded that the fuel standard facially discriminated against out-of-state energy firms, because it took into account the origin of the fuel and the distance fuel travels to reach California. Id.

              The Ninth Circuit disagreed, concluding that the fuel standard did not facially discriminate against interstate commerce, because the state based its standards on the carbon intensity of fuel sold in the state, not on the fuel’s origin. 730 F3d at 1078. The Ninth Circuit remanded to the district court for a determination of whether the regulation’s ethanol provisions discriminated in purpose or practical effect. Id. If not, it was to apply the Pike balancing test. Id.

              The city argues that, like the state fuel standard at issue in Rocky Mt. Farmers Union, the FFT amendments are facially neutral regarding the origin of fossil fuels, with no motive to protect local economic actors from out-of- state competition. However, we have already concluded that the FFT amendments are not facially discriminatory, or designed to protect in-state economic actors from direct out-of-state competition. The question is whether the FFT amendments discriminate against interstate commerce in purpose or practical effect. We fail to see how the holding or facts in Rocky Mt. Farmers Union assists the city. The facts in Rocky Mt. Farmers Union would be closer to all fours with the present case if the fuel standard had limited fuel terminals in the state in a manner that effectively prohibited storage or transloading of high-carbon fuels intended for other states or to international markets, but allowed high-carbon fuels to continue to be stored, transloaded and sold at current levels to California residents, with numerous exemptions to protect local economic actors from the impacts of the restriction on commerce in high-carbon fuels effectively imposed on fuel that passes through to other states.33

33 In addition, the Ninth Circuit recognized that the federal Clean Air Act expressly authorizes California to adopt its own fuel standards. 730 F 3d at 1078. Again, in the present case, no party cites us to any act of Congress authorizing a city or state to regulate the size or number of fossil fuel transportation facilities in a manner that has the practical effect of prohibiting export terminals.

 

One of the signal characteristics of a law that discriminates in purpose or practical effect in violation of the dormant Commerce Clause, and is thus subject to elevated scrutiny, is unequal treatment between in-state and out-of- state economic actors or markets. Or. Waste Sys., 511 US at 99 (discrimination “means differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter); see also Philadelphia v. NewJersey, 437 US 617, 628, 98 S Ct 2531 (1978) (“It does not matter that the State has shut the article of commerce inside the State in one case and outside the State in the other. What is crucial is the attempt by one State to isolate itself from a problem common to many by erecting a barrier against the movement of interstate trade.”). Despite the facial neutrality of the FFT amendments, the city has done all it can to effectively eliminate any city role in the export of fossil fuels, while continuing to provide for existing and projected local consumption of fossil fuels. Hunt v. Wash. State Apple Adver. Comm’n, 432 US 333, 350, (referring to “the Commerce Clause’s overriding requirement of a national ‘common market’” (internal citations omitted)). Nothing cited to us in Rocky Mt. Farmers Union, or any other case, suggests that a law with that purpose and that practical effect can avoid elevated levels of scrutiny under the dormant Commerce Clause analysis.

              Among the dormant Commerce Clause cases cited to us are two cases involving zoning or land use regulations. The city relies on Wal-Mart Stores,Inc. v. City of Turlock, 483 F Supp 2d 987, 991-92 (E D Cal 2006), which involved a city zoning text amendment that created three new categories of commercial retail land uses: discount stores, discount clubs, and discount superstores. Under the amendments, the first two categories were allowed as conditional uses in commercial zones, but the last category, discount superstore, was not allowed in any city zone. Id. Wal-Mart, which operated a discount store in the city but sought to establish a discount superstore, argued that the prohibition on establishing a discount superstore in any zone discriminates against interstate commerce in practical effect, because it prevents Wal-Mart, an out-of-state retailer, from operating within the city in Wal-Mart’s preferred superstore format. Id. at 1009-14. However, the district court rejected those arguments, concluding that the facially neutral ordinance did not discriminate against interstate commerce because any retailer, in-state or out-of-state, can locate retail operations in the city, and offer any products, except in the discount superstore format. Id. The court held that the Commerce Clause does not protect the preferred structure or methods of a retail operation, or the right to conduct business in the most efficient manner. Id. In the present case, the city argues likewise that FFT owners are not entitled to establish terminals in any preferred format or conduct terminal operations in the most efficient manner.

              Like the present case, Wal-Mart Stores, Inc., involved creation of a new land use category, which the ordinance then prohibits within the city. However, the resemblance mostly ends there.In the present case, the city deems a particular commodity in interstate commerce (fossil fuels) to be undesirable and therefore adopts steps to freeze the number and size of facilities that meet local demands for that undesirable commodity, and to preclude facilities that would store and transload the undesirable commodity for further shipment to interstate and international markets. In Wal-MartStores, Inc., the commodities at issue were desirable, it was only the size and format of the building in which the goods would be sold to which the city objected. 483 F Supp 2d at 1012. Before and after the zoning amendments in Wal-Mart Stores, Inc., the same type and quantity of goods flowed from the stream of interstate commerce to enter the city and be sold. Id. The only difference was that after the amendments those goods would have to be sold in smaller retail outlets, not in the larger superstore format that Wal-Mart preferred. Id. at 1016. By contrast, in the present case, if the FFT amendments achieve the city’s several goals, the amendments strongly affect the type and quantity of fossil fuels that could potentially flow into and out of the city from the stream of interstate commerce. Prior to the FFT amendments, a new propane or coal export terminal could be sited within the city, to transload those types of fossil fuels from North Dakota or Montana for shipment to overseas markets. Under the FFT amendments, such facilities are effectively prohibited, and the types and quantities of fossil fuels that are stored and transloaded in the city are, as a practical matter, limited to those needed to satisfy the current and projected future local or regional demand.34

34 The city’s findings recognize that the establishment of fossil fuel terminals in the region would significantly increase the quantity of fossil fuels flowing into, and out of, the state. As the findings note:

“[T]here is a wide margin between the size of recently proposed crude oil, coal, and (LNG) terminals in the Pacific Northwest and the scale of expected growth of existing Portland fuel terminals that generally serve the regional market area * * *.” Record 330.

     In other words, due to the large volumes of fossil fuel that could be transported via fossil fuel export terminals (like the Pembina project), if established in the city or elsewhere in the region or state, these export terminals would significantly increase the amount of fossil fuel that enters the state, compared to any increase attributed to local or regional consumption. Record 46 (Figure 7). Conversely, if the city succeeds in discouraging the establishment of fossil fuel export terminals in the city, that could effectively reduce the quantity of fossil fuels that would otherwise cross state lines, and which is intended to again cross state lines on its way to interstate or international markets. Generally, a law with the intent and the effect of reducing the free flow of commerce across state lines is viewed with suspicion under the dormant Commerce Clause. See Hughes v. Oklahoma, 441 US 322, 337-38, 99 S Ct 1727 (1979) (statute prohibiting the transport of minnows out of the state violates the dormant Commerce Clause, because it “overtly blocks” the flow of interstate commerce at the state’s borders); but see Maine v. Taylor, 477 US 131 (state law prohibiting import of baitfish in order to protect health of unique and fragile state fisheries survives Commerce Clause challenge because the prohibition serves a legitimate local purpose that cannot be adequately served by available nondiscriminatory alternatives).

              To put the circumstances in Wal-Mart Stores, Inc. on a closer footing with the present case, imagine that the City of Turlock objects to the import of goods manufactured overseas, and adopts amendments that prohibit new distribution centers that receive and transfer foreign-made goods to stores across the United States, but nonetheless the amendments allow local retailers to continue to sell foreign-made goods in city stores to meet the local demand. While a comprehensive and even-handed embargo on importation of foreign goods to local markets might survive scrutiny under a dormant Commerce Clause analysis, if the ban did not unduly impact interstate commerce, the above-described selective approach would not, because it does not evenhandedly distribute benefits and burdens, but instead concentrates the bulk of its impacts on interstate commerce, while attempting to shield local interests from those impacts.35

35 Indeed, the Eastern District of California rejected a similar argument made by Wal-Mart. As the court stated: “[The ordinance] leaves the market open to all local or foreign retailers of all local or foreign products, except in the discount superstore format. The Commerce Clause does not protect the particular structure or methods of operation of a retail market.”) Wal-Mart Stores Inc., 483 F Supp 2d at 1012.

The FFT amendments suffer the same flaw.

              Petitioners argue, and we agree, that the circumstances in Island Silver Spice, Inc. v. Islamadora, 542 F3d 844 (11th Cir 2008), bear a closer resemblance to the present circumstances.In Island Silver Spice, Inc., a municipality adopted zoning amendments that effectively prohibited establishment of new “formula” restaurants and retail establishments, defined as a retail sale establishment required by contract to provide a standardized array of services or merchandise, décor, architecture, layout or similar standardized features, by limiting street level frontage and total square footage only for “formula” establishments, but not for similar retail uses. Id. at 845. The apparent target of the zoning prohibition was nationally and regionally branded formula retail stores, such as chain pharmacies. Id. The zoning Amendment did not facially discriminate against out-of-state stores; nonetheless, the Eleventh Circuit concluded that by limiting the square footage and street frontage for “formula” establishments, the amendment had the practical effect of discriminating against interstate commerce, because it effectively eliminated the establishment of new regionally and nationally branded retailers, a quintessential type of interstate commerce. The Eleventh Circuit therefore applied the elevated scrutiny test and ultimately concluded that the amendment failed that test. Id. at 847.36

36 The Eleventh Circuit also affirmed findings that the zoning amendment failed under the Pike balancing test. Id. at 847 n 2.

              The present circumstances are similar to those in Island Silver Spice, Inc., in that in both cases the city objects to a particular article or aspect of commerce that is intrinsically interstate in nature (nationally branded retail stores on the one hand, fossil fuels on the other hand), and adopts a zoning amendment that prohibits establishment of such uses, or the expansion of existing uses above a certain size, but allows existing undesirable uses to continue in the city essentially as nonconforming uses. 542 F3d at 846-47 (noting the municipality’s existing zoning allowed the use of the subject property as a retail use comprising over 12,000 square feet of floor area, greatly exceeding the ordinance’s dimensional limitations for “formula retail” businesses). In Island Silver Spice, Inc., the Eleventh Circuit had no trouble concluding that a municipality’s efforts to prohibit new and expanded nationally branded formula retail uses (by limiting square footage and street frontage) had a discriminatory practical effect on interstate commerce. Id.

              The Eleventh Circuit then considered whether the zoning amendment was supported by a legitimate local purpose that could not be adequately served by reasonable nondiscriminatory alternatives. 542 F3d at 847. In Island SilverSpice, Inc., the stated purposes of the zoning ordinance prohibiting “formula” retail included the protection of the municipality’s small town character. Id. The Eleventh Circuit concluded that while preserving small town character is a legitimate purpose, the municipality had no small town character to preserve, because the town already included a number of pre-existing formula retailbusinesses, and had no historic district or affected historic buildings. Id. Further, the Eleventh Circuit noted that the zoning ordinance included exceptions that would allow smaller formula retail stores, as well as large non-formula retail establishments, none of which furthered preservation of a small town character. Id. at 847-48. Because the municipality failed to identify a legitimate local purpose to justify the amendment’s discriminatory practical effects, the Eleventh Circuit invalidated the amendments without considering whether the municipality could show that adequate, nondiscriminatory methods were available to achieve the legitimate local purpose. Id.

              In the present case, the city argues that its stated interests in reducing vulnerability to seismic damage and reducing the city’s contribution to climate change caused by fossil fuel consumption are both legitimate local interests, and we agree. However, as explained below, the FFT amendments do not, in fact, appear to further those interests. Moreover, the city makes no effort to demonstrate that adequate, nondiscriminatory methods are unavailable to meet those interests.

              With respect to vulnerability of existing FFTs to seismic events, the FFT amendments appear to do nothing to reduce that vulnerability.37

37 The PSC recommended draft offered existing FFTs an incentive to upgrade to current seismic standards, in exchange for a 10 percent expansion. However, the city council eliminated that incentive.

With respect to new or expanded FFTs, such facilities would presumably comply with modern seismic codes, and it is not clear how a blanket ban on new or expanded FFTs serves the purpose of reducing vulnerability of FFTs to seismic events. It is also not clear why the city could not continue to allow new or expanded FFTs in industrial areas of the city that are not located on soils subject to liquefaction, instead of broadly prohibiting new and expanded FFTs everywhere in the city. Further, the FFT amendments allow without restriction (1) small fossil fuel terminals below two million gallons in size, (2) unlimited size mono-modal fossil fuel terminals served only by trucks, as well as (3) terminals of any size that handle non-fossil fuels such as bio-diesel and ethanol, in the same industrial areas that are vulnerable to seismic shocks. We are cited to no evidence that seismic damage to a bio-diesel tank farm would be any less catastrophic than seismic damage to a tank farm of petro-diesel, or that an intermodal petroleum terminal is any more susceptible than a similarly sized mono-modal petroleum terminal served only by trucks. There is no evidence presented to us that the express target of the FFT amendments, intermodal terminals, is uniquely vulnerable to seismic damage compared to mono-modal facilities.

              In short, although reducing vulnerability to seismic damage is a legitimate local interest, the FFTs amendments appear to do very little, if anything, to reduce that vulnerability, and are riddled with exceptions that appear to undermine any steps toward reducing vulnerability to seismic damage that the amendments might achieve.Further, and most importantly for our analysis here, the amendments appear to favor local interests, to the detriment of interstate and international market interests. Finally, as noted, the city makes no attempt to demonstrate that there are no adequate, nondiscriminatory alternatives to serve the local interest in reducing vulnerability to seismic damage to FFTs. Based upon the record before us, it is not clear that such a showing can be made.

              The city’s other stated goal—reducing the city’s contribution to global warming and climate change—is an entirely laudable goal. However, the city identifies nothing in the FFT amendments directed at actually accomplishing that goal. The FFT amendments include no provisions designed to reduce the local consumption of fossil fuels, and thus the local emission of greenhouse gasses. In implementing Policy 6.48, the city attempted to limit local FFTs to serve only the regional demand for fossil fuels, but the amendments do not propose anything to reduce local or regional demand. As discussed with regard to Goal 12, the city’s working assumption is that local demand for fossil fuels will plateau and even decline in the foreseeable future, making new or expanded FFTs unnecessary. But the city does not identify anything in the FFT amendments that would cause or contribute to any plateau or decline in local fossil fuel demand and therefore reduce local greenhouse gas emissions. In other words, although the amendments prohibit new or expanded FFTs, under the city’s assumptions—that local demand will plateau or decline—there is no basis to assume that new or expanded FFTs would ever be necessary to meet increased local demand. The prohibition on new or expanded FFTs appears to do little or nothing to further the city’s interest in reducing local consumption or the carbon content of locally consumed fossil fuels.

              The only scenario we can understand that could causally connect the prohibition on new or expanded FFTs with a reduction in local demand for fossil fuel (and a resulting reduction in local greenhouse gas emissions) would require that the city’s working assumptions be incorrect, and in fact local demand for fossil fuel will increase in coming years beyond the capacity of the existing FFTs and of new small or mono-modal FFTs to accommodate. In that circumstance, the shortage of FFT capacity might cause a local shortage of fossil fuel that could raise prices, thus discouraging consumption and encouraging a transition to non-fossil fuel sources. However, that speculative chain of causation, contrary to the city’s working assumptions, is a thin basis for meeting the city’s burden of demonstrating the existence of a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.

              In any case, the most important impact of the FFT amendments for purposes of the dormant Commerce Clause analysis is the fact that the amendments are intended to and have the practical effect of precluding the establishment of new fossil fuel export terminals. We question whether the city’s desire to preclude establishment of fossil fuel export terminals reflects a legitimate local interest. As noted, the city may well take responsibility for itsown greenhouse gas emissions from local consumption of fossil fuels without running afoul of the dormant Commerce Clause (if those efforts create only incidental impacts on interstate commerce). However, we do not believe the city can, consistent with the dormant Commerce Clause, deliberately attempt to slow or obstruct the flow of fossil fuels from other states to consumers in other states or countries with the apparent goal of reducing generation of greenhouse gases elsewhere in the world, and justify that attempt as a legitimate local interest.

              Finally, even if reducing fossil fuel consumption and emissions elsewhere in the world can be viewed as a legitimate local interest for purposes of the discriminatory practical effect analysis, as noted the city makes no effort to demonstrate that that purpose cannot be adequately served by reasonable nondiscriminatory alternatives.

              In sum, we conclude that the FFT amendments are discriminatory in practical effect, and that the city has failed to demonstrate that the amendments serve a legitimate local interest or purpose that cannot be adequately served by reasonable nondiscriminatory alternatives. Accordingly, the FFT amendments violate the dormant Commerce Clause.

  1. Pike Balancing Test

              In the event that the FFT amendments are deemed to be nondiscriminatory and to have only indirect impacts on interstate commerce, we consider whether the FFTs amendments survive under the so-called “Pike balancing test.” Under Pike, “nondiscriminatory regulations that have only incidental effects on interstate commerce are valid unless ‘the burden imposed on interstate commerce is clearly excessive in relation to the putative local benefits.’” Or. Waste Sys., 511 US 93, 99 (quoting Pike, 397 US 137, 142).

              As explained above, the FFT amendments appear to provide little if any local benefits with respect to reducing seismic vulnerability and reducing the city’s local contributions to global warming. The city’s other express goal of precluding export terminals is arguably the FFT amendments’ most potentially significant burden on interstate commerce. It is difficult to evaluate how much of a burden the city’s prohibition on new or expanded FFTs would have on the establishment of new export terminals, or on the flow of fossil fuels into and through any future export terminals in the city or region, because the record includes no attempt to conduct that evaluation. Nonetheless, it is clearly the city’s intent that the impact on the interstate and international market in fossil fuels will be significant, and that few or no fossil fuel export terminals will become established in the city or perhaps even in the region. See Record 206 (“As we all experienced with the [P]embina proposal last year, the [city’s] zoning code actually allows fossil fuel terminals as a warehouse and freight movement use in our zoning code today without any limit on the size of these terminals. We, of course, passed [Resolution 37168] saying we’re going in a different direction and today is the proposal to put that into city law, into our code.”)

              Weighed against that burden are the putative local benefits. We understand the city and Riverkeeper to argue that precluding fossil fuel export terminals will provide local benefits in the form of reducing harm to its citizens caused by fossil fuel consumption in other countries, which are the final destination for fossil fuels that would be transloaded onto ships at the export terminals that the amendments effectively prohibit. The city argues that simply because “climate-change risks are ‘widely-shared’ does not minimize” a government’s interest in reducing contributions to global warming. Massachusetts v. EPA, 549 US 497, 522, 127 S Ct 1438 (2007) (concluding that Massachusetts has standing to file suit challenging denial of a petition for EPA rulemaking to adopt rules to reduce U.S. emissions that contribute to global warming and climate change). The city cites Rocky Mt. Farmers Union, 730 F3d at 1103, to argue that a state is free to regulate in-state commerce with the goal of influencing out of-state choices of market participants. The city also cites Pac. Merch. Shipping Ass’n, 639 F 3d 1154, for the proposition that a state’s interest in protecting the health of its residents from air pollution far outweighs the federal interest in the free flow of commerce.

              However, none of the cited cases support the proposition that a city or state can take steps to slow or block the flow of commerce to other states or countries, in an effort to prevent the blocked commodities from being consumed in those countries, causing air pollution in those countries that contribute to global warming, which in turn will adversely impact the citizens of the city or state (along with everyone else in the world). We do not believe that such attenuated benefits, which would literally apply to every person on the planet, can be reasonably described as “local” benefits, for purposes of the Pike balancing test.

              The Massachusetts case held that the impacts of global warming on the state (e.g., increased erosion to coastlines) gave the state standing to challenge denial of a petition for the EPA to issue rulemaking directed at reducing national carbon emissions, given the United States’ role as one of the world’s biggest contributors to carbon emissions. 549 US 497, 521-526. However, nothing in the case suggests that the state has a uniquely “local” interest or benefit in preventing the flow of fossil fuels across the state to other countries, in order to reduce the consumption of fossil fuels in those other countries, for purposes of the Pike balancing test.

              As noted, Rocky Mt. Farmers Union involved state rules imposing low carbon fuel standards on fuel sold in the state. 730 F3d 1070. The standards took into account the full carbon costs of producing and transporting ethanol intended for the California market, and in so doing, also considered the origin of the ethanol. 730 F3d at 1088-93. As Riverkeeper argues, the Ninth Circuit observed that carbon emitted in manufacturing ethanol in Iowa or Brazil impacts Californians as much as carbon emitted in Sacramento, given the widespread impacts of global warming. Id. at 1081.38

38 However, the Ninth Circuit also found that California is “uniquely vulnerable to the perils of global warming,” due to its long coastline, and dry fragile forests and deserts. 730 F3d 1070, 1106.

The Ninth Circuit concluded that the fuel standards did not facially discriminate or discriminate in practical effect, but remanded to the District Court to determine if the impacts on interstate commerce clearly exceeded the putative local benefits under the Pike balancing test. Id. at 1100. The Ninth Circuit did not, of course, reach the remanded issue, but there is certainly language in the opinion suggesting that the “local benefits” to be balanced under Pike could include reducing the state’s unique vulnerability to the impacts of global warming, achieved in part using the state’s economic leverage to persuade out-of-state ethanol producers to reduce the carbon used to produce and transport fuel for the California market. Id.

              However, the salient difference between Rocky Mt. Farmers Union, and the facts presented to us here is that California’s regulatory efforts were entirely directed at fuel intended for consumption in California. 730 F3d at 1079-80. In the present case, the city’s effective prohibition on fossil fuel export terminals (like the proposed Pembina project) is intended to slow or obstruct the flow of fossil fuel from other states to international markets, presumably to discourage the consumption of fossil fuels in other countries. At best, that effort, if successful, might slightly reduce consumption of fossil fuels in other countries, but there is no evidence or argument that the city would receive any particular local benefit in doing so. The city does not argue that it is “uniquely vulnerable” to global warming, or that it stands to gain or lose more than any other city in the world from infinitesimal reductions or increases in global warming.

              Finally, Pac. Merch. Shipping Ass’n, 639 F 3d 1154, also does not assist the city. In Pac. Merch. Shipping Ass’n, the Ninth Circuit upheld under the Pike balancing test state rules requiring vessel operators calling at a California port to use low-sulfur marine fuels within the state’s territorial waters—rules intended to reduce coastal air pollution caused by burning high-sulfur marine bunker fuel that the record showed directly affected the health of the state’s citizens. Id. at 1159. Notably, the rules included an express exemption for vessels traveling through territorial waters toward non-state ports or markets (known as the “innocent passage” provision). Id. at 1158. The Ninth Circuit held that the impacts on interstate or international commerce did not clearly exceed the well-documented local benefits of preserving the health of the state’s citizens against coastal air pollution. Id. at 1180-1182. The present case differs, again, in that the FFT amendments do little or nothing to reduce or change local consumption of fossil fuels or local contributions to global warming, and the effective ban on fossil fuel export terminals would have, at best, only the most attenuated connection to reduced global warming and concomitant effects on the health of the city’s citizens.

              Reduced to essentials, the FFT amendments represent the city’s attempt to isolate itself to some extent from the national and international economy in fossil fuels. See Chemical Waste Management v. Hunt, 503 US 334, 341-42, 112 S Ct 2009 (1992) (“The Court has consistently found parochial legislation of this kind to be constitutionally invalid, whether the ultimate aim of the legislation was to assure a steady supply of milk by erecting barriers to allegedly ruinous outside competition,” or a tax discriminating against interstate commerce even when such tax was “designed to encourage the use of ethanol and thereby reduce harmful emissions,” for “in all of these cases, a presumably legitimate goal was sought to be achieved by the illegitimate means of isolating the State from the national economy.” (Internal citations omitted.)). Given the city’s geographic and strategic position astride a major trade route, its attempts to isolate itself from the national and international market in fossil fuels have far greater potential impact on those markets than would the same efforts by a more geographically isolated city. Weighed against those potentially significant burdens on interstate commerce are local benefits from the legislation that, based on this record, appear to be attenuated at best. We conclude therefore that the burdens on interstate commerce are “clearly excessive” in relation to the putative local benefits, and the FFT amendments also fail under the Pike balancing test.

The ninth assignment of error is affirmed.

DISPOSITION

OAR 661-010-0071 provides that LUBA shall reverse a land use decision when the Board finds that the decision is unconstitutional. We concluded under the ninth assignment of error that the FFT amendments are inconsistent with the dormant Commerce Clause. Accordingly, reversal is the appropriate disposition.

The city’s decision is reversed.

by and , Sightline Institute

Changing the way we elect public officials can change who runs for office, how they run their campaigns, who wins, and how voters feel about their democracy. Sightline believes that better electoral methods can create better campaigns, better options for voters, and more representative governments. In the past months, we have examined:

This article summarizes our current thinking, as of June 2017, about which cities, counties, and state actions advocates could target for reform based on the best combination of legal, political, and equipment opportunity. First we provide brief summaries of each priority action; at the bottom of the article you’ll find a table summarizing this information.

1. Switch from gerrymandered district lines to fair multi-member districts.

Timeline: 2020
Impact on Equipment Readiness: Leading up to the change, enough counties could convert to RCV-ready equipment so that, with some sharing between counties, the RCV-ready counties could count the ballots in a statewide RCV election.
Electoral reform: Oregon state legislature could implement STV for elections.

A multi-partisan Redistricting Task Force is currently formulating a plan to use an independent redistricting commission, like California’s, to prevent partisan gerrymandering in Oregon. But Oregon could do California one better by passing a bill or an initiative that would put a permanent end to gerrymandering. By requiring the independent commission to draw multi-member districts and using a proportional election method called Single Transferable Vote (STV), Oregon could slash the number of “wasted” votes and increase accountability and representativeness of elected officials.

For example, the commission could draw 10 House districts, and voters in each would elect six representatives and three senators using a multi-winner ranked ballot. Alternatively, the commission could draw 20 House districts, and voters could elect three representatives from each and continue electing one senator from each of 30 districts.

The law or initiative could also require counties to acquire RCV-ready equipment whenever they turn over and, in the interim, ask counties with capable equipment to count the ranked ballots.

2. Use Mixed Member Proportional (MMP) voting to elect the state legislature.

Timeline: 2020
Impact on Equipment Readiness: Current equipment can already count MMP ballots.
Electoral Reform: Oregon voters would elect state legislators via Mixed Member Proportional voting.

Alternatively, a law or initiative could implement an independent redistricting commission and the same method that New Zealand uses to achieve proportional representation, called Mixed Member Proportional (MMP). The independent commission would draw 30 districts, each of which would elect one senator and one representative. Voters would also get to cast a vote for their favorite party, and those votes would elect representatives from regional party lists.

For example, a coastal, a metro, and an eastern region could each elect 10 regional representatives. These regional representatives would allow voters to have more voice, break the two-party duopoly, and combat partisan gridlock by adding urban conservatives, rural progressives, and other viewpoints to the house of representatives.

Current voting equipment can already count MMP ballots.

3. Bloc voting charter cities in counties with RCV-ready or -capable voting equipment could adopt multi-winner RCV.

Timeline: 2018-2022
Impact on Equipment Readiness: This reform would take advantage of existing equipment.
Electoral Reform: Charter bloc voting cities could use STV for city office elections.

Many cities in Oregon already use multi-member districts and bloc voting to elect city councilors. For example, Lake Oswego elects three city councilors every two years. All candidates run in a single pool, voters get to vote for three, and the three candidates with the most votes win. The problem with this method is that voters in the majority can elect all three councilors, leaving voters in the minority with no voice on the council. Even if voters in the minority make up one-third or more of voters, they don’t have the chance to elect one of the three councilors.

In the seven Oregon counties with RCV-ready or -capable equipment, 25 charter cities use bloc voting. Each of those is a ripe target for advocates to show how multi-member districts with ranked-choice voting could yield better representation. Any of these 25 bloc voting charter cities could amend its charter to change its ballots from “Vote for Three” to “Rank three Candidates” and immediately achieve much fairer representation of the voters.

4. Bloc voting charter cities in counties with Clear Ballot voting equipment could adopt multi-winner RCV.

Timeline: 2018-2022
Impact on Equipment Readiness: If a city adopts RCV and its county requests an RCV software module from Clear Ballot, then all counties using Clear Ballot (currently 13 in Oregon and Washington) would become RCV-capable.
Electoral reform: This would institute STV for city office elections.

Any bloc voting charter city located in a county using Clear Ballot voting equipment could also amend its charter to allow voters to rank candidates for city council. Although Clear Ballot equipment is not RCV-ready, it could easily become so if the manufacturer writes and certifies a software module. If a charter city adopted RCV (either multi-winner STV or single-winner IRV), or especially if several charter cities within a county did, the county would need to ask Clear Ballot to write the software module. This would have the additional benefit that now the thirteen counties in Oregon and Washington using Clear Ballot would have access to the module and could instantly become RCV-ready.

In the eleven Oregon counties with Clear Ballot equipment, 14 charter cities use bloc voting. These 14 cities could be targets for advocates.

5. Charter counties or charter cities in counties with Clear Ballot equipment could adopt RCV.

Timeline: 2018-2022
Impact on Equipment Readiness: If a county or city adopts RCV and the county requests an RCV software module from Clear Ballot, then all counties using Clear Ballot (currently 13 in Oregon and Washington) would become RCV-capable.
Electoral Reform: These counties and cities could adopt either STV or IRV for local elections.

Six charter counties (Hood River, Jackson, Josephine, Lane, Multnomah, Washington) use Clear Ballot equipment. Another five code counties (Coos, Deschutes, Harney, Klamath, Linn) use Clear Ballot. If any of the six charter counties, or any of the 52 charter cities within any of the 11 Oregon Clear Ballot counties, adopted RCV, Clear Ballot would need to write an RCV software module, and the thirteen counties in Oregon and Washington using Clear Ballot would have access to the module and could instantly become RCV-ready.

 

Portland, a charter city in Multnomah County, could be a particular target for advocates. As Sightline has analyzed, the Portland City Council is not representative of the city’s residents, and multi-member districts with RCV could help.

6. Charter cities within RCV-ready counties could adopt RCV.

Timeline: 2018-2022
Impact on Equipment Readiness: This reform would take advantage of existing equipment.
Electoral Reform: These cities could use IRV or STV for city elections.

Two code counties (Clatsop and Marion) are RCV-ready. Any of the 8 charter cities in those counties could adopt RCV (either multi-winner STV or single-winner IRV) and immediately implement with no further action needed by the counties. These charter cities could be priority targets for advocates looking to get more Oregon experience with RCV with limited hurdles.

7. Clatsop county or any charter city within an RCV-capable county could adopt RCV.

Timeline: 2018-2022
Impact on Equipment Readiness: This reform would take advantage of existing equipment and prompt counties to purchase third-party software.
Electoral Reform: Clatsop and other RCV-capable charter cities could adopt STV or IRV for local elections.

Benton, a charter county with RCV-capable equipment, has already adopted RCV. Clatsop, another charter county with RCV-capable equipment, could adopt RCV. Four code counties (Columbia, Lincoln, Polk, Tillamook) have RCV-capable equipment, so any of the 21 charter cities within those counties could adopt RCV, and the county could use third-party software to count the city’s ballots.

8. Lane County could adopt Star Voting.

Timeline: 2018
Impact on Equipment Readiness: If a county or city adopts Star Voting, a.k.a. SRV, and the county requests a Star Voting software module from Clear Ballot, then all counties using Clear Ballot (currently 13 in Oregon and Washington) would become Star Voting-capable.
Electoral Reform: Lane County could adopt Star Voting for county elections.

Lane County commissioners might put a charter amendment on the 2018 ballot adopting Star Voting for county commissioner elections. Advocates could work to convince voters to approve the initiative. If the initiative wins, Lane County could ask Clear Ballot to develop a Star Voting software module, and all Clear Ballot counties in Oregon and Washington would become Star Voting-ready.

9. The two code counties that are already planning to replace their voting equipment in the next five years could buy RCV-ready equipment.

Timeline: 2018-2022
Impact on Equipment Readiness: Two counties and all the cities within them would become RCV-ready.
Electoral Reform: These counties and the cities within them would face no technical obstacles to adopting RCV.

Two code counties, Douglas and Yamhill, are considering updating their voting equipment in the next two to five years. These counties will be spending money on new equipment anyway, so they might as well make sure that equipment gives the flexibility for the charter cities within them, or for the state, to adopt ranked choice voting.

Advocates could encourage the county auditors and councils to choose RCV-ready equipment to preserve flexibility, or they could encourage any charter city within any of the counties to adopt RCV, thus necessitating RCV-ready equipment.

10. Umatilla County could adopt RCV and purchase RCV-ready equipment.

Timeline: 2018-2022
Impact on Equipment Readiness: Umatilla county and all the cities within it would become RCV-ready.
Electoral Reform: Umatilla and its charter cities could use IRV or STV for local elections.

Umatilla, a charter county, has outdated voting equipment, and we are not aware of plans to replace it. Advocates could encourage Umatilla to amend its charter to adopt RCV, pushing the county to upgrade its equipment.

Summary of potential Oregon advocacy efforts

The table below shows our estimate of the timeline and impacts of each of the above efforts. Darker blue means a quicker or larger impact (for example, short-term and statewide), while lighter blue indicates longer-term or impact on only one or a few counties or cities within Oregon.

 Action Items (see above) Time-line Electoral System Reform Goal New Equipment or Updates Needed
1. State redistricted into multi-member districts 2020 STV All counties would need RCV-ready equipment.
2. State redistricted into MMP districts 2020 MMP None: Existing equipment OK for MMP.
3. STV in bloc voting cities with RCV-capable equipment 2018- 2022 STV None: takes advantage of existing equipment.
4. STV in charter bloc voting cities with Clear Ballot equipment 2018- 2022 STV Needs Clear Ballot to offer SRV-capable software.
5. RCV in charter cities and counties with Clear Ballot equipment 2018- 2022 IRV or STV Needs Clear Ballot to offer SRV-capable software.
6. Charter counties and cities with RCV-ready equipment adopt RCV 2018- 2022 IRV or STV None: takes advantage of existing equipment.
7. Charter county and cities with RCV-capable equipment 2018- 2022 IRV or STV None:  takes advantage of existing equipment.
8. Lane Co. adopts SRV 2018 Star Needs Clear Ballot to offer SRV-capable software.
9. Two code counties acquire RCV-ready equipment 2018- 2022 Enables other  reforms Update to RCV-ready equipment.
10. Umatilla County acquires RCV-ready equipment 2018- 2022 Enables other reforms Update to RCV-ready equipment.

Republished with kind permission of Sightline Institute, whose mission is to make the Northwest a global model of sustainability—strong communities, a green economy, and a healthy environment.

by and , Sightline Institute

Cascadian reformers are hoping to spread the use of Ranked-Choice Voting (RCV) from its regional foothold in Benton County, Oregon, to elect executives and legislatures across the region. State law in both Washington and Oregon dictates electoral methods for non-charter, a.k.a. “code,” counties and cities. But charter counties and cities in Oregon have a large amount of autonomy, and in Washington some autonomy, to amend their charters and improve local electoral methods. However, outdated voting equipment unable to process ranked ballots can be a roadblock to adopting RCV.

Voting equipment is typically purchased and managed at the county level, and some Northwest counties already have equipment that can tally ranked ballots, or could with a small upgrade—these places are ripe for RCV advocacy. For counties with outdated equipment, the easiest course of action is to simply choose ranked-choice-ready equipment when they are purchasing new equipment anyway. Or, they could ask a neighboring county with ranked-choice-ready equipment to tally their ranked ballots for them.

 

Adopting RCV election methods and acquiring RCV-ready equipment are like the proverbial chicken-and-egg: counties may not choose RCV-ready equipment if no elections in their jurisdiction use RCV elections, but voters might be reluctant to switch to RCV elections if their voting equipment cannot count ranked ballots. This article, a complement to our review of the legal barriers to ranked-choice voting in Oregon, identifies places where adopting RCV would be easy and timely both in terms of required equipment upgrade (if any) and policy changes.

  • First, we briefly review Oregon state law limitations  on cities and counties wishing to adopt RCV.

 

  • Next, we describe voting equipment options and costs and the current equipment in Oregon.

 

  • Then we identify advocacy priorities.

 

  • Finally, we include an appendix detailing equipment currently in use in each county in Oregon and how it stacks up on ranked-choice-readiness.

Sightline supports other electoral reforms in addition to RCV, including Mixed Member Proportional (MMP) to elect state legislators and Score Runoff Voting (SRV) for executive races. This report only covers RCV-readiness because existing equipment could already count an MMP ballot, and we could not find any existing systems or software packages that can count SRV ballots.

In summary, we see the following categories of counties as high priorities for RCV advocacy:

1. Counties using Clear Ballot voting equipment

Six Oregon charter counties (Hood River, Jackson, Josephine, Lane, Multnomah, and Washington) and five non-charter counties (Coos, Deschutes, Harney, Klamath, and Linn) use Clear Ballot voting equipment. Clear Ballot seems to be a system of choice for counties replacing their equipment—of the 22 Oregon and Washington counties that have purchased new equipment in the past three years, 13 have chosen Clear Ballot.

Clear Ballot hardware can handle RCV ballots, but unfortunately, its software cannot. However, Clear Ballot appears eager to write an RCV software module, if a client requested it. If even one Clear Ballot county, or possibly a city within one of the counties, adopted RCV and asked Clear Ballot to write a software update module, all thirteen would quickly become ranked-choice-capable. King County, Washington, in particular could be a target for advocates because it is a large charter county with a charter review process coming up; if it adopted RCV, it could negotiate with Clear Ballot to write the software module.

2. Counties that are already ranked-choice-ready

“Ranked-choice-ready” (RCV-ready) equipment can internally count ranked-choice ballots for either Instant Runoff Voting (IRV) or Single Transferable Vote (STV). Two Oregon non-charter counties (Clackamas and Marion) and five Washington non-charter counties (Chelan, Douglas, Island, Kittitas, Skagit) have RCV-ready equipment.

 

Unfortunately, elections in code counties are governed by state law, so none of these non-charter counties could adopt RCV itself, but advocates could urge charter cities within Clackamas and Marion countiesfor example, Lake Oswego and Salem—to adopt ranked-choice election methods with no equipment barriers.

3. Counties that are already ranked-choice-capable

“Ranked-choice-capable” (RCV-capable) equipment can tally ranked-choice ballots with additional software support, either by adding a software module available from the manufacturer or by using third-party software. Two Oregon charter counties (Benton and Clatsop) and four Oregon non-charter counties (Columbia, Lincoln, Polk, and Tillamook) are RCV-capable. All six of them use the same equipment from ES&S, and one of them, Benton County, is already planning to acquire third-party software to implement the countywide RCV initiative voters approved last year. Once the county purchases this software, any charter city within Benton, such as Corvallis, could adopt RCV for municipal elections and have immediate access to RCV-ready equipment.

 

Advocates could encourage the other five Oregon counties with the same equipment as Benton to purchase the software in bulk along with Benton and potentially negotiate a better deal with the manufacturer. Then the counties, and all charter cities within these six RCV-capable Oregon counties, would be ready to tally ranked ballots.

4. Counties already planning to replace their equipment

Approximately 17 Oregon counties have equipment close to or more than a decade old and nearing the end of its useful life, so they may soon be turning over equipment. Advocates could urge them to choose ranked-choice-ready equipment and not lock themselves into another decade of inflexibility.

 

Douglas and Yamhill counties in Oregon have indicated plans to replace equipment in the near future. Though these non-charter counties cannot themselves adopt RCV, charter cities within them, such as Sutherlin and McMinnville, could. If charter cities adopted RCV, then ranked-choice capability would be a requirement of the county’s new system. Or, if advocates convinced the counties to purchase RCV-ready equipment, these cities would be ripe for election reform.

Oregon state law limitations on city and county adoption of ranked-choice voting

In Oregon, the constitution specifically allows ranked-choice voting and proportional representation. The constitution also gives charter cities and towns total authority over the “structural and organizational arrangements” of local government. Indeed, the Advisory Commission on Intergovernmental Relations ranks Oregon number one in the United States for county home rule authority and number six for city home rule authority. Oregon has nine home rule (charter) counties and more than one hundred charter cities—all of these could amend their charters to adopt ranked-choice voting.

 

Oregon’s 27 non-charter, a.k.a. “code,” counties and more than 100 code cities are governed by state law. State law requires primaries and may require plurality voting. The only way for code counties and cities to adopt ranked-choice voting would be for the state legislature to change the law and instead require code cities and counties to use ranked-choice voting, which is unfortunately unlikely. However, charter cities within code counties could amend their charters and use RCV.

Voting equipment

Counties purchase and manage voting equipment, but they may only use equipment that has been certified by the Secretary of State. Counties usually purchase new equipment roughly every ten years. They may use their own funds to do so or apply for state or federal funds. Counties have several options for gaining access to RCV-ready or -capable equipment, and the right option will depend on the county’s budget, size, and options related to its existing equipment.

Certified systems in Oregon

Counties may only use systems that the state’s Secretary of State has certified.

The Oregon Secretary of State has certified systems from three major voting equipment manufacturers: Clear Ballot Group, Election Systems and Software (ES&S), and Hart Intercivic. The Washington Secretary of State has certified systems from those three manufacturers plus one more: Dominion. Of these vendors:

  • Two have system options that can process and tally ranked-choice ballots internally: Dominion’s Democracy Suite system and Hart’s Verity 2.0 system. While no Northwest counties use Dominion’s Democracy Suite at this time, two Oregon counties will be using Hart’s Verity 2.0 by the end of 2017.

 

  • ES&S’s DS850 high-speed scanner, when paired with ES&S’s Electionware software, can produce a cast vote record (CVR) which can then be exported to third-party software for vote tabulation. Six counties in Oregon currently have the CVR-capable software/hardware combination.

 

  • Finally, the Clear Ballot Group is a relatively new voting equipment vendor, and the company has indicated great willingness to work with an interested county to write a RCV software module that would make its system ranked-choice-capable. Eleven Oregon counties will be using the Clear Ballot system by year’s end.

 

  • All other certified systems are not ranked-choice-capable either internally or via third-party software. These include a) the ES&S Unity system paired with M650 scanners, used by 15 Oregon counties and b) Hart’s HVS system, in use in 2 Oregon counties.

Of the systems that are RCV-capable, most can tabulate a multi-winner RCV race—a Single Transferable Vote (STV) election—via a particular software configuration. Counties interested in running STV elections will likely need to request this option from their equipment manufacturers or the third-party software developer with which they work.

The following table summarizes this information.

  • Bright green indicates systems that are internally ranked-choice-ready and could process a ranked-choice election immediately.

 

  • Light green systems are ranked-choice-capable: they have the potential to process a ranked-choice election with an upgrade to their current software or by using third-party software.

 

  • Yellow systems could process a ranked-choice election by purchasing new (but already developed) software from their current manufacturer, or by asking their current manufacturer to develop new software.

 

  • Red systems cannot process ranked-choice Counties with these systems would need to upgrade both their hardware and software components to become ranked-choice capable, or else send their ballots to another county for processing.
Original Sightline Institute graphic, used under its free use policy.

* These columns list the counties that will be using this system by the end of 2017; a few counties are currently undergoing equipment transitions (King, WA; Hood River, OR) and are included in row of the system they are upgrading to.

Counties could choose RCV-ready when replacing equipment

The cheapest and easiest route to RCV-readiness is for counties to simply choose RCV-ready equipment when they are replacing old equipment anyway. Advocates could target the counties that are preparing to purchase new equipment to make sure they choose well. To support this plan of action, the Secretary of State could issue a directive requiring that, when counties purchase new equipment, it must be RCV-ready equipment. Or, if the Secretary of State offers funds to help counties upgrade their equipment, the Secretary could only make the funds available to counties purchasing RCV-ready equipment.

Many counties in Oregon purchased their current voting equipment in the early 2000s when there was some federal money available. Since then, relatively few counties have upgraded their equipment, leaving many of Cascadia’s US counties with vote-counting equipment that will likely need to be updated soon. Several Oregon counties have already begun the replacement process: 13 of Oregon’s 36 counties have replaced their equipment since 2015, largely without the help of any federal or state funds.

Counties could share equipment

Counties might not need to own RCV-ready equipment to conduct an RCV election. Counties could share equipment or even jointly purchase it. Auditors or clerks from smaller, or non-RCV-capable counties could transport ballots for counting to nearby counties that have the necessary equipment and pay them an administrative fee to tally the ballots. Eight Oregon counties are already RCV-ready or RCV-capable, and if the thirteen counties using Clear Ballot—including Multnomah and King, the largest counties in Oregon and Washington—became RCV-ready, together they might have the capacity to count an RCV election for any county in the state, or even for a statewide election.

Equipment upgrades are relatively affordable

Vote-counting systems typically consist of hardware—a ballot scanner slightly larger than an office printer—and software—a system for tallying the votes, usually bundled with the hardware. Since both Oregon and Washington vote by mail, voters mail their ballots to a central location in their home county, and the county scans and counts them, making equipment needs simpler. (In contrast, states with physical polling locations must also purchase smaller polling-place equipment and scanners, plus counting software for each precinct. Then, each precinct counts its votes and transmits totals to a central location.)

Most counties in Oregon and Washington have between 2 and 10 scanners, depending on a host of factors including the scanner type, software package, and population of the county. New scanners cost in the ballpark of $60-110,000. Software packages and update modules are usually less costly but quite variable, ranging from potentially free for a small upgrade to around $25,000 for a new module, to as much as $200,000 for a whole new software system. Counties update their software to newly released versions semi-regularly, and the costs of the updates, if any, would be subject to the contract negotiated with the vendor. Free third-party software for counting ranked ballots from some systems may soon be federally certified and available from the Ranked Choice Voting Resource Center.

Equipment upgrade and replacement costs

As mentioned above, county equipment can fall into a number of categories of RCV-readiness. Although pricing depends on each county’s specific situation, equipment upgrades fall into a few rough price ranges:

  • RCV-ready: the county’s vote-counting equipment can process and tally these ballots internally. These counties are ready to go, with no further equipment or software expenditures.

 

  • RCV-capable: the county’s vote-counting equipment can process and tally RCV ballots with a software upgrade:
  1. Six Oregon counties have EVS (ES&S DS850 scanners and Electionware software) that can read ranked-choice ballots and produce a cast vote record (CVR). The county can use third-party software to tally the CVRs. Third-party software costs in the neighborhood of $20-$25,000. Certified third-party software maybe available for free later this year from the Ranked Choice Voting Resource Center, so these counties may also be able to count ranked ballots with no further expenditures.
  2. Three Oregon counties have ES&S DS850 scanners but use the company’s older Unity software system. These counties could purchase Electionware software from the manufacturer to produce a CVR and then use third-party software to tally ranked ballots. Upgrading from Unity to Electionware might cost the county on the order of $25,000, plus another $20-$25,000 for third-party software, unless the county can get it for free from the Ranked Choice Voting Resource Center.
  • RCV potential: Eleven Oregon counties counties use Clear Ballot equipment. Clear Ballot scanners can read a ranked ballot, but its software can’t count it. If Clear Ballot wrote a software upgrade module that could internally tally ranked ballots, any county using Clear Ballot could purchase the software module and immediately be RCV-ready. If multiple counties negotiated with Clear Ballot at once, it might reduce the cost per county. Pricing information is hard to find, but we believe this might cost each county on the order of $20,000.

 

  • Not RCV-capable: The 17 Oregon counties with neither hardware nor software that is compatible with any of the above options could share equipment with neighboring RCV-ready or -capable counties and pay only fees associated with this equipment use. Or they could acquire new equipment—scanner and software—that is RCV-ready. New equipment might cost between $85,000 and $530,000, depending on the size of the county.

 

Add it all up, and for less than $4.5 million, a generous estimate, every county in Oregon could have RCV-ready or RCV-capable equipment. That’s 0.01 percent of the state’s annual budget. And again, many counties will have to incur the cost of upgrading equipment soon anyway, so becoming RCV-ready could be an added bonus, not an added cost. In the meantime, not every county needs to be RCV-ready to run an RCV election, because non-ready counties could ask for help from ready counties.

The Accessibility Voting Unit (AVU) provided at election centers for people with disabilities must also support ranked ballots. Counties usually purchase AVUs from the manufacturer at the same time they purchase new scanners and software. We’ve included estimates for the cost of AVU equipment in each county in our cost estimates, but our charts detailing voting equipment options do not include information about AVUs.

Data transmission

Ranked-choice elections at the local level (e.g., county-, municipal-, or district-level elections) do not introduce any added complexity with regards to information transmission during the counting process since Oregon and Washington voters mail their ballots to a central tallying location within each county anyway.

Statewide races present a greater challenge, though, since RCV races must be centrally tabulated when the race is not decided in the first round. The state would need to develop procedures for counting subsequent rounds. County auditors could transmit round one totals (first-choice totals) to the Secretary of State (SOS). The SOS could then tell all counties the lowest candidate(s) to eliminate and recount the second-choice votes on those ballots. Each county would then transfer the votes and send the next round of top-choice totals to SOS. This process would repeat until a winner is decided. Alternatively, counties could transmit “digital vote records” to the state, which are electronic cards with memory chips that contain all scanned ballot information, and then the state would do the entire tabulation.

Priority actions to move RCV in the Pacific Northwest

Democracy advocates in Oregon have several ripe opportunities for growing the usage of ranked-choice voting in the region. Below, we list opportunities to take steps towards RCV in Oregon counties in order of ease of implementation, including both voting equipment and policy considerations.

Oregon

We see the greatest opportunities for progress toward RCV in 22 of Oregon’s 36 counties. In many cases, a small change in equipment could make it possible to utilize ranked-choice voting for elections in these counties in the near future. In other cases, counties are a few steps away from being able to adopt RCV, but all have clear paths forward. The table below lists these opportunities in order of priority, based on those easiest to achieve and most influential, to those most difficult to achieve or with least immediate impact.

As stated above, all charter counties and cities in Oregon can amend their charter and implement either IRV or STV. The counties are listed roughly in order of opportunity, with the shortest-term opportunities at the top in the darkest green , and the longer term opportunities at the bottom in lightest green.

Original Sightline Institute graphic, used under its free use policy.

Appendix: Current state of voting equipment in Oregon counties

The following color-coded tables describe the state of RCV-readiness in each county in Oregon and Washington. As in the color-coding schema above,

  • dark green counties have equipment that is ready to internally count an RCV election now;

 

  • light green counties have the potential to process a ranked-choice election with available software upgrades or support;

 

  • yellow counties might be able to process a ranked-choice election by asking the manufacturer to develop new software or purchasing a new (though already developed) software package; and

 

  • red counties have equipment that cannot process ranked-choice ballots and would need to purchase both hardware and software to become ranked-choice ready.

In the fifth column, we note any counties that have indicated to us their plans to replace their systems in the near future. We’ve   counties with these plans; these counties might be high-priority targets for activists looking to ensure that all newly purchased voting equipment in the region is ranked-choice-ready.

State of ranked-choice-readiness in Oregon

All Oregon counties and cities are empowered by the state’s constitution to adopt ranked-choice voting, though the path is more straightforward in charter counties, which can amend their charters via a vote of the county council or the people.

Original Sightline Institute graphic, used under its free use policy.

Excerpted from “An Action Plan for Ranked-Choice-Ready Voting Equipment” by Sightline Institute. Sightline Institute has long championed returning our democratic systems to the hands of everyday people, rather than leaving it to the interests of Big Money. In 2015, Sightline helped craft the groundbreaking Honest Elections Seattle citizens’ initiative, putting into one package some of the toughest corruption prevention and clean-election laws found anywhere in the United States, including a startlingly original campaign funding system called Democracy Vouchers.

Many Oregonians are disappointed that the Oregon Legislature finished its 2017 session without “doing something” about the high cost of housing in the Portland metro area. The view from here is that we dodged a bullet thanks to that inaction, because there is little or no understanding of what forces have combined to produce the runup in prices, to say nothing of what counterforces might be effective in addressing them.

People who deal with elders a lot learn to recognize that, before we can help someone, we first have to undo a lot of the “help” already being inflicted on them. There are countless cases of elders who improve considerably once someone finally realizes that yet another intervention is only adding to the problems, and that the best thing that can be done is to stop all the medications and observe closely. Someone who gets this is Chuck Marohn, founder and President of Strong Towns, a perennial OregonPEN favorite. Chuck recently published this piece as “A Composition of Fallacy.”

by Chuck Marohn, StrongTowns.org

The ongoing series I’ve been doing on incremental development, and the re-posting of the series I wrote last year on Portland’s housing emergency, has brought the critics out — friend and antagonist alike — to attack my simple ways. Chuck, you’re usually so smart but you just don’t get these fast growing cities.

That is true, at least the latter half: I don’t get these fast growing cities. They don’t make any sense to me. Buried beneath the rent controls, inclusionary zoning mandates, luxury condos, billion dollar build-it-and-they-will-come transportation investments, subsidized parking and the like, it’s impossible to figure out what distortion is causing what to happen. I find the simple narratives put forth to be lacking (and very convenient as they each generally support the worldview of those making that case).

And amid this strange soup of imbalance, when I hear intelligent people put forth their own simplistic analysis and silver-bullet solution, I’m even more confused. Cities are complex, adaptable systems that defy linear input/output modeling. Anyone who suggests they have “the answer” to Portland’s housing emergency — or that of San Francisco, Austin, Washington DC, Boston or any similar situation — is either a charlatan or a fool.

For me it is like a sick patient who is taking a couple dozen serious medications. In the complex, adaptive system that is a unique human body, how do all of these different interventions react and interact to make the underlying problems better or worse? How do those underlying problems manifest as symptoms, the pain that tells us something isn’t working? Nassim Taleb, the Patron Saint of Strong Towns Thinking, suggests an approach to discovering the answer that he calls Via Negativa.

 

Through Via Negativa, we get closer to understanding the uncertainty of complex systems by removing distorting interventions. As he states, we reduce the “branching chains of unintended consequences” which we don’t even understand (though, again, charlatans and fools may think they do — and they’ll even use data to “prove” their hunch). My fixation on incremental, and my extensive writing on Portland’s housing emergency, are not about giving a solution. They are about getting us to a system that produces a solution.

So, when our friend Joe Cortright, writes:

Our good friend at Strong Towns, Chuck Marohn is utterly right about a great many things. But he’s committed a classic Kotkinesque blunder when it comes to evaluating the connection between density and home prices. His theory is that higher density makes housing more expensive.

….he’s not only misstating what I’ve said, he’s ascribing a theory to something I’ve not even theorized. Again, this is my core problem with the entire housing conversation our “experts” are having. That conversation attempts to reduce everything to “___[fill in the blank]___ causes housing to be more expensive and therefore all we need to do to make housing affordable is ___[fill in the blank]___.”

Let me show you. Just choose your favorite; there’s one for every ideology to cling to:

  • A limited supply of units causes housing to be more expensive and therefore all we need to do to make housing affordable is build more units.

 

  • Zoning causes housing to be more expensive and therefore all we need to do to make housing affordable is repeal zoning codes.

 

  • NIMBYs cause housing to be more expensive and therefore all we need to do to make housing affordable is ram things through over their objections.

 

  • Greedy landlords cause housing to be more expensive and therefore all we need to do to make housing affordable is force landlords to sell/rent housing units at lower prices than what they could otherwise get in the marketplace.

 

  • Government bureaucrats and red tape cause housing to be more expensive and therefore all we need to do to make housing affordable is speed up approvals.

 

  • Speculators cause housing to be more expensive and therefore all we need to do to make housing affordable is punish rent seekers with punitive taxes.

 

  • Luxury condo units cause housing to be more expensive and therefore all we need to do to make housing affordable is require developers to build non-luxury units and sell them at a loss.

 

  • The Urban Growth Boundary causes housing to be more expensive and therefore all we need to do to make housing affordable is remove the Urban Growth Boundary.

 

  • Dramatic upzonings around major government transportation investments raise land prices and cause housing to be more expensive and therefore all we need to do to make housing affordable is downzone these areas and take an even greater loss on these investments.

 

  • Federal Reserve policy of buying mortgage backed securities causes housing to be more expensive and therefore all we need to do to make housing affordable is close the Federal Reserve, or at least restrict their purchasing of assets.

 

  • Etc…

So which one of these is it? Let me state this clearly: I don’t know. Neither do you. I personally believe it’s likely that each of them has some validity, the total impact of which fluctuates and changes from parcel to parcel, neighborhood to neighborhood, month to month the way things do in a complex system where individual actors are generally free to receive feedback and take action independently of others.

Photo by Johnny Sanphillippo

Photo by Johnny Sanphillippo

The great thing is, there’s this really amazing system for figuring it out. It’s called: price. Prices, when they are allowed to find their own equilibrium (more on that in a bit), are an amazingly powerful signal. They signal to people whether now is a good time to buy. Or a good time to sell. They signal whether now is a good time to build. Or a bad time. They signal the type and quantity of housing unit in demand. And they signal when enough have been built.

 

Prices are not perfect. They fluctuate, sometimes dramatically. Sometimes they are much higher than what is warranted. Sometimes they are far lower. These are opportunities for people to buy and sell, to invest and divest, the acts of which impact price and bring it closer to a true equilibrium. In short: prices are feedback. When individuals in the system don’t get accurate feedback, things get way out of whack.

 

For example, let’s assume for a bit that a combination of speculation, capital flows, regulatory burden and greed have pushed housing prices in Portland 20% above what the market can actually support over the long term. That artificially elevated price will signal demand to investors and developers and they will respond by building more. This will raise the cost of materials and labor, the latter of which will pull workers from other sectors, increasing wages across the board. This shortage of workers could potentially depress other sectors in the local economy causing jobs to locate elsewhere. The artificially high tax receipts from the elevated housing values induces the local government to take on more debt and invest in additional growth opportunities. And on and on….all the things we see in a boom market.

 

So what happens when prices fall, when that artificial 20% evaporates — it wasn’t financially sustainable over the long term and so a correction is inevitable — and prices drop? That’s feedback and we’d expect that builders would stop or slow building, demand for labor would fall, people would lose their jobs, government revenues would be pinched….. All the things we see in a recession.

Photo by Johnny Sanphillippo

Photo by Johnny Sanphillippo

Here’s the trick: we’re not trying to have a boom or a bust. We don’t want an artificial high because we don’t want the painful hangover that comes with a correction. What we want is for prices to work, for those signals to effect supply and demand in a far more fluid and dynamic way so that things don’t get so far out of whack. We want our pain in small, continuous doses instead of no pain followed by catastrophe failure (which, if I can inject morals into this conversation, is a terrible approach for the most fragile and vulnerable among us. They get sidelined on the way up and trampled on the way down.)

 

When I look at cities like Portland and Austin, the Bay Area and the major cities of the Northeast, and I ponder Via Negativa — the ways we remove those distorting influences and the branching chain of unintended consequences that result — I find myself returning to three central strategies. Contrary to what Cortright and others have suggested, they are a package set of actions — not individual silver-bullets — designed, not to solve the housing problem, but to bring us closer to a situation where price signals provide accurate feedback so a set of solutions emerge.  They are:

  1.      Provide, by right, the ability of every property in the entire city to be improved to the next level of intensity. If people want to call this upzoning, I’m fine with that description.
  2.      In places where dramatic leaps in development intensity have been codified, downzone to allow only the next level of intensity.
  3.      Halt the expansion of all infrastructure systems that are meant to support additional development until such time (likely never) that the tax base is sufficient to cover the ongoing maintenance and replacement of all existing infrastructure systems.

I’ve had this image in my mind of a person adrift at sea, flailing around trying desperately to discover solid ground upon which they can anchor themselves. Without solid ground — without an anchoring in accurate prices and real feedback — we’re just adrift. Any policy prescription is simply going to add to that chain of unintended consequences, regardless of our intentions. My suggestions are a way for us to find solid ground, a stable equilibrium where we can confidently start building incrementally again, only this time with consistent and accurate feedback driving our actions.

I want to add one final thought: Strong Towns has a very ideologically diverse audience. I’m proud of that, but I also understand that there are quite a few of you reading this that see the word “market” and can’t help but apply your partisan prism. Understand, I’m not a free market ideologue. I don’t pretend that our current system of debt-fueled, corporate-led capitalism is either just or representative of what its proponents like to suggest is a “free market” approach.

I don’t embrace market feedback because I embrace modern capitalism; I embrace markets because I believe empowered individuals, given good information and free will to act, will collectively make decisions that are — over time — generally good and just. There will be exceptions, of course, but our decisions will be stronger if we all have the feedback that accurate price signals provide.

Let’s stop pretending we know the simple antidote to the painful symptoms our housing prices are expressing and instead humble ourselves to admit that we don’t understand all the complexity, that it is beyond us to grasp the chain of unintended consequences our prior actions have created. If we do that, we can embrace an approach that gives us more accurate feedback, one that allows solutions to emerge through our collective action. That’s how we build truly Strong Towns.