City of Corvallis, an Or. Mun. Corp. v. State

• Decision Date: 13 May 2020
• Docket Number: A164595
• Citation: 304 Or.App. 171,464 P.3d 1127
• Parties: CITY OF CORVALLIS, an Oregon municipal corporation, Plaintiff-Appellant, and League of Oregon Cities, Plaintiff-Intervenor below, and City of Philomath, Intervenor-Appellant, v. STATE of Oregon; Kate Brown, Governor of Oregon; Bev Clarno, Secretary of State; and Jim Rue, Oregon Department of Land Conservation and Development ; and Caldwell Farms, LLC, Defendants-Respondents, and Michael Galpin et al., Defendants.
• Court: Oregon Court of Appeals

304 Or.App. 171

464 P.3d 1127

CITY OF CORVALLIS, an Oregon municipal corporation, Plaintiff-Appellant,andLeague of Oregon Cities, Plaintiff-Intervenor below,andCity of Philomath, Intervenor-Appellant,

v. STATE of Oregon; Kate Brown, Governor of Oregon; Bev Clarno, Secretary of State; and Jim Rue, Oregon Department of Land Conservation and Development ; and Caldwell Farms, LLC, Defendants-Respondents,andMichael Galpin et al., Defendants.

A164595

Court of Appeals of Oregon.

Argued and submitted July 13, 2018

May 13, 2020

James K. Brewer argued the cause for appellants. On the briefs were David E. Coulombe and Fewel, Brewer & Coulombe.

Peenesh Shah argued the cause for respondents State of Oregon, Kate Brown, Bev Clarno, and Jim Rue. Also on the brief were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.

No appearance for respondent Caldwell Farms, LLC.

Philip Thoennes filed the brief amicus curiae for League of Oregon Cities.

Before Ortega, Presiding Judge, and Aoyagi, Judge, and Powers, Judge.^*

AOYAGI, J.

In this declaratory judgment action, plaintiffs the City of Corvallis (Corvallis) and the City of Philomath (Philomath) seek to have ORS 222.127 declared unconstitutional on its face or as applied to them. ORS 222.127 provides that, if certain conditions are met, the legislative body of a city "shall annex" certain territory within its urban growth boundary, "without submitting the proposal to the electors of the city." In plaintiffs’ view, the statute impermissibly interferes with the procedures of municipal governments and thus violates the "home rule" provisions of the Oregon Constitution.¹

The trial court granted the state defendants’² motion for summary judgment, as well as their motion to strike certain declarations from the summary judgment record, and it denied plaintiffs’ cross-motions for summary judgment. For the reasons that follow, we affirm all those rulings on the merits. However, because the existing judgment contains no declarations, which is improper in a declaratory judgment action, we vacate and remand for entry of a judgment that declares the rights of the parties.

I. OVERVIEW OF "HOME RULE"

A basic understanding of "home rule" is necessary context for the parties’ arguments, so we begin by providing a very general overview.

Under federal constitutional law, municipal corporations are "convenient agencies" of their respective states. Hunter v. City of Pittsburgh , 207 U.S. 161, 178-79, 28 S. Ct. 40, 52 L. Ed. 151 (1907). As such, states enjoy every prerogative to add or withdraw authority from their municipalities, merge municipalities, or abolish a municipality altogether, "unrestrained by any provision of the Constitution of the United States." Id . It follows that cities lack inherent authority and possess only those powers affirmatively granted by the state. That principle, known as "Dillon's Rule"—referring to an influential treatise on municipal law—dominated American legal scholarship in the nineteenth and early twentieth centuries. See City of Corvallis v. Carlile , 10 Or. 139, 141 (1882). Thus, in Oregon, prior to 1906, the state retained all power over local affairs and had the exclusive authority to adopt and amend city charters, to establish and alter municipal boundaries, and to grant and remove legislative authority. See id. at 140-41 (recognizing the lack of constitutional restraint on state authority over municipal corporations and stating that municipal corporations are "subordinate branch[es]" of the state).

In 1906, riding a wave of home-rule amendments in other states, Oregon voters amended the Oregon Constitution to endow cities with home-rule authority and limit the power of the state legislature over local matters. Specifically, Article XI, section 2, was amended to preclude the state legislature from enacting, amending, or repealing "any charter or act of incorporation for any municipality, city or town" and to grant to municipal voters the "power to enact and amend their municipal charter, subject to the Constitution and criminal laws of the State of Oregon." Further, Article IV, section 1, was amended to reserve initiative and referendum powers "to the qualified voters of each municipality and district as to all local, special and municipal legislation of every character in or for their municipality or district."

The passage of the home-rule amendments laid the foundation for what has now been over a century of legal disputes regarding the scope of local government authority vis-à-vis state authority. See State v. Port of Astoria , 79 Or. 1, 17, 154 P. 399 (1916) (by 1916, "[t]he language employed in Article XI, Section 2," had already "been the subject of much discussion").

In the resulting case law, a seminal home-rule decision of the modern era is La Grande/Astoria v. PERB , 281 Or. 137, 576 P.2d 1204, adh'd to on recons , 284 Or. 173, 586 P.2d 765 (1978). In La Grande , the Supreme Court crafted a two-part test to determine where state authority ends and local authority begins. In short, if a state statute addresses "the structure and procedures of local agencies," it "impinges on the powers reserved by the amendments to the citizens of local communities" and must be justified "by a need to safeguard the interests of persons or entities affected by the procedures of local government." Id . at 156, 576 P.2d 1204. Conversely, if it is "a general law addressed primarily to substantive social, economic, or other regulatory objectives of the state," a state statute "prevails over contrary policies preferred by some local governments, if it is clearly intended to do so, unless the law is shown to be irreconcilable with the community's freedom to choose its own political form." Id .³

Another significant home-rule principle is the distinction between intramural and extramural authority. "When the legal voters of a city enact municipal legislation [that] operates only on themselves and for themselves, and [that] is confined within and extends no further than the corporate limits, then such voters are exercising intramural authority." Port of Astoria , 79 Or. at 17, 154 P. 399. But when "the legal voters of a city attempt to exercise authority beyond the corporate limits of their municipality, they are using an extramural power." Id . While cities have "inherent, home-rule authority" to exercise intramural power, the same is not true of exercising extramural power. Costco Wholesale Corp. v. City of Beaverton , 343 Or. 18, 25, 161 P.3d 926 (2007).

Finally, with respect to annexation in particular, the power to annex territory into a municipality comes from the state and does not derive from home-rule authority. Thurber v. McMinnville , 63 Or. 410, 414-15, 128 P. 43 (1912), abrogated on other grounds by State ex rel. Heinig v. Milwaukie et al. , 231 Or. 473, 373 P.2d 680 (1962). Annexation is an extramural act. Id . at 415-16, 128 P. 43. As such, it is well settled that the state may impose conditions on a municipality's act of annexing territory into the municipality. See, e.g. , Morsman v. City of Madras , 203 Or. App. 546, 555, 126 P.3d 6 (2006) (holding that the state has the authority to decide whether the residents of property subject to annexation get to vote on the annexation). What is not well settled—in that it was identified as an open question in 1990 and has yet to be answered—is whether some aspects of annexation are subject to exclusively local control:

"Even though a city must follow a legislatively-approved procedure to annex territory, it does not follow that the legislature can decree any annexation for any reason. There is still room to argue, *** that the borders of a municipal corporation are an integral part of the corporate charter which cannot be altered by the legislature."

Mid-County Future Alternatives v. City of Portland , 310 Or. 152, 163-64, 795 P.2d 541 (1990).

II. FACTS

With that basic understanding of home rule in mind, we turn to the facts of this case. "On review of cross-motions for summary judgment, we view the record for each motion in the light most favorable to the party opposing it to determine whether there is a genuine issue of material fact and, if not, whether either party is entitled to judgment as a matter of law." O'Kain v. Landress , 299 Or. App. 417, 419, 450 P.3d 508 (2019).

In early 2016, the legislature enacted SB 1573, now codified at ORS 222.127. See Or. Laws 2016, ch. 51, § 2. As relevant here, it provides:

"(1) This section applies to a city whose laws require a petition proposing annexation of territory to be submitted to the electors of the city.

"(2) Notwithstanding a contrary provision of the city charter or a city ordinance, upon receipt of a petition proposing annexation of territory submitted by all owners of land in the territory, the legislative body of the city shall annex the territory without submitting the proposal to the electors of the city if :

"(a) The territory is included within an urban growth boundary adopted by the city or Metro, as defined in ORS 197.015 ; "(b) The territory is, or upon annexation of the territory into the city will be, subject to the acknowledged comprehensive plan of the city;

"(c) At least one lot or parcel within the territory is contiguous to the city limits or is separated from the city limits only by a public right of way or a body of water; and

"(d) The proposal conforms to all other requirements of the city's ordinances."

ORS 222.127 (emphasis added).

As described in the legislative history, SB 1573 was intended to prevent local voters from unilaterally preventing the development of land that was placed within the urban growth boundaries of cities for the purpose of development. See Audio Recording, Senate Committee on Rules, SB 1573, Feb. 24, 2016, at 39:43 (statements of John Van Landingham and Sen Lee Beyer), http://olis.oregonlegislature.gov (accessed Apr. 22, 2020). The statute applies only to annexations of territory within the urban growth...