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Thursday, February 29, 2024
Courthouse News Service
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Oil & Gas Industry Fights Oregon Air Law

PORTLAND, Ore. (CN) - The oil and trucking industries claim Oregon's Clean Fuels Program is unconstitutional, unenforceable and discriminatory, and asked a federal judge to block it.

The American Fuel & Petrochemical Manufacturers et al. sued the Oregon Environmental Commission, the governor and attorney general on Monday in Federal Court. It claims Oregon's program is preempted by the Clean Air Act and "is designed to create green jobs in Oregon at the expense of other states' economies."

American Fuel & Petrochemical Manufacturers is a trade association of more than 400 companies, including "virtually all U.S. refiners and petrochemical manufacturers."

Co-plaintiff American Trucking Association represents more than 30,000 motor carriers that collectively haul "a significant portion of the freight transported by truck in the United States."

The final plaintiff, the Consumer Energy Alliance, is a trade association that claims 400,000 members.

They claim Oregon's attempts to control vehicle emissions and fuel additives have been deemed unnecessary by the Environmental Protection Agency. The state program also discriminates against fuel is imported into Oregon with the intended purpose of promoting development of in-state fuel production, the groups say.

Oregon phased in the Clean Fuels Program in 2012, based on a 2009 legislative authorization directing the Department of Environmental Quality to reduce greenhouse gas emissions by 10 percent over 10 years.

Former Governor John Kitzhaber initiated the program, claiming it would help Oregon meet the goals of its 10-year energy plan, which include reducing dependence on foreign oil, developing renewable energy resources in the state, reducing greenhouse gas emissions, improving energy efficiency and boosting the state economy.

On Jan. 7 this year, the Oregon Department of Environmental Quality "imposed a mandatory reduction in average carbon intensity on importers and producers of fuels sold in Oregon," according to the complaint, despite American Fuel's request "that DEQ not proceed with the rulemaking because it is contrary to governing federal law and raises serious constitutional concerns."

Governor Kate Brown signed SB 324 on March 12, repealing the sunset provisions that would have ended the law at the end of the year.

The program requires importers to begin reducing carbon intensity of fuel sold in Oregon in 2016, with increased reductions scheduled for each year until 2025. Or fuel importers can purchase credits to offset the impact of the carbon intensity of their fuels.

The plaintiffs claim the program discriminates against out-of-state refiners and incentivizes importers to impose additional costs on out-of-state refiners.

The program is "tailored to benefit fuel producers within Oregon at the expense of fuel importers and refiners that produce fuels in other states and countries," the lawsuit states, since the burdens of the program fall "almost entirely" on importers.

There are no oil refineries or producers of gasoline or diesel gas in Oregon. In-state producers of biofuels won't face additional costs because their fuels already meet the clean fuel standards.

The program assigns higher carbon intensity scores to ethanol produced in California and the Midwest than in Oregon, based on the plant used to make the ethanol, the lawsuit states.

State Senator Chris Edwards, the chief sponsor of the recent bill that repealed the sunset provision, said the program will "reduce carbon pollution, increase consumer choice, and create jobs right here at home."

The plaintiffs claim that that is tantamount to a confirmation "that the Oregon Program is designed to create green jobs in Oregon at the expense of other states' economies."

The Clean Air Act prohibits states from enacting a control or prohibition of fuel emissions that the Environmental Protection has not declared necessary, the groups say.

American Fuel wants an injunction stopping implementation of the program and a declaration that the program violates the Constitution and is unenforceable, plus costs and fees.

Their lead counsel is Thomas Sand, Miller Nash Graham & Dunn.

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