Federal lawsuit challenging Oregon’s ‘clean fuels’ program dismissed

Source: By Saul Hubbard, The Register-Guard • Posted: Monday, September 28, 2015

A federal lawsuit aimed at blocking the implementation of Oregon’s controversial low-carbon fuel standard has been dismissed.

The lawsuit, filed by three national industry groups representing oil and trucking companies, claimed that the fuel standard, known as the “clean fuels” program, violated the U.S. Constitution’s commerce clause by discriminating against out-of-state fuel and biofuel companies. It also claimed the program is pre-empted by the federal Clean Air Act.

U.S. District Judge Ann Aiken in Eugene dismissed all those arguments in a decision released Thursday.

The low-carbon fuel standard requires fuel importers to reduce the carbon content of their car and truck fuels by 10 percent by 2025, in order to reduce pollution. They can do so by blending cleaner biofuels into their products, or by purchasing “clean fuel” credits from alternative fuel producers or projects.

The Democrat-controlled state Legislature narrowly voted to implement the program this year after a contentious debate. Opponents say the program will be difficult to implement and may significantly increase gas prices.

Aiken found that the “clean fuels” program “is not facially discriminatory (under the commerce clause) because it distinguishes among fuels based on lifecycle (greenhouse gas) emissions, not (their) origin or destination.” The fact that the program may benefit ­Oregon-based alternative fuel producers “is insufficient to evince a discriminatory purpose,” she added.

On the Clean Air Act preemption, Aiken ruled that the plaintiffs had misinterpreted the federal statute, adding that “air pollution prevention is within the states’ traditional authority,” barring explicit federal legislation barring it.

In a similar lawsuit filed against California’s low-carbon fuel standard, a U.S. District judge initially found for the plaintiffs. But the 9th U.S. Circuit Court of Appeals reversed that ruling, allowing California’s program to move forward. In 2014, the U.S. Supreme Court declined to review that decision.

Aiken referenced the 9th Circuit Court decision repeatedly in her ruling. Industry groups now can appeal, but their appeal would go back to the 9th Circuit Court.

Several environmental groups, which intervened as defendants in the case, applauded Aiken’s decision.

“Our constitutional system encourages states to take actions to protect their people against health and environmental threats like climate change,” said Patti Goldman, an attorney with the San Francisco-based nonprofit group Earthjustice. “The industry is trying to prevent such measures and perpetuate their market share in dirty fuels.”

Representatives for the plaintiffs — the American Fuel & Petrochemical Manufacturers, the American Trucking Associations and Consumer Energy Alliance — could not be reached for comment Thursday afternoon.

A separate state lawsuit, filed by the Western States Petroleum Association consortium against the low-carbon fuel standard, still is ongoing. The oil industry association challenged administrative rules for the program that were drafted by the Oregon Department of Environmental Quality and finalized earlier this year. The lawsuit claims that set of rules went beyond the authority granted to DEQ by the Legislature when lawmakers first approved the program in 2009, thereby making the rules illegal. A similar lawsuit in California succeeded in stalling the program for two years.

Meanwhile, industry representatives and environmental groups are wrangling over the ballot title language for three separate initiatives that would water down or repeal the “clean fuels” program. Once the titles are certified by the Oregon Supreme Court, supporters can decide whether to collect the signatures necessary to put the issue to voters on the November 2016 ballot.