Cap & Trade for Oregon gas?

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Associated Oregon industries

by John Ledger

Low Carbon Fuels May Ignite Next Session

Oregon’s attempt to impose a Cap & Trade-like system on gasoline and diesel took a new twist recently when the Ninth Circuit Court sent California’s Low Carbon Fuel Standard (LCFS) back to the lower courts. The proponents in California see this as good news (it wasn’t declared unconstitutional), but raises serious doubts about its legality in Oregon.

The Ninth Circuit Court of Appeals noted that only California was exempt from the Federal Clean Air Act’s preemption on individual state fuel blends thus raising the argument that Oregon’s program is preempted by federal law. On the other hand, the Oregon Department of Justice disagrees with the preemption angle and supports the LCFS restrictions. Should the program be enacted, a prolonged legal battle is all but inevitable.

A Low Carbon Fuel Standard imposes increasing amounts of ethanol from various sources, specially blended and produced for Oregon, finally requires the supplier to purchase greenhouse gas offsets from some yet to be established market. Costs will be passed on to Oregon consumers in the form of higher gas and diesel prices. California and Oregon would be the only states with a LCFS mandate, although California’s would be less stringent than ours.

See the AOI Leading Issues for more detail about a LCFS as well as Oregonians for Sound Fuel Policy.

Newspaper Editorials across the state have excoriated the program, it is opposed by a broad business coalition, and a letter has been sent to legislators clarifying the business position.

Business groups opposing the LCFS include:

Associated Oregon Industries

Associated General Contractors

Associated Oregon Loggers

National Federation of Small Businesses

Northwest Grocery Association

Oregon Concrete and Aggregate Producers Association

Oregon Dairy Farmers Association

Oregon Farm Bureau

Oregon Home Builders Association

Oregon Metals Industry Council

Oregon People’s Utility District Association

Oregon Petroleum Association

Oregon Refuse and Recycling Association

Oregon Restaurant and Lodging Association

Oregon Trucking Associations

Portland Business Alliance

Western States Petroleum Association

The LCFS is a priority goal of environmental groups and supported by the administration. It died by a single vote on the Senate Floor in the 2013 Oregon Legislative Session and is expected to resurface in 2014.