Low-carbon fuel standard challenged by manufacturing, energy groups

Out-of-state groups say new law violates constitutional commerce clause.

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Oregon’s recently-signed low-carbon fuel standard law is being challenged in the U.S. District Court by out-of-state groups claiming it violates the Constitution.

Similar litigation stalled the implementation of California’s low-carbon law, the Portland Tribune reports.

The state Environmental Quality Commission voted in January to adopt regulations that will require fuel importers and producers to reduce the carbon content of transportation fuels by 10 percent during the next decade, starting in January 2016. The rules were based on a 2009 bill, which was set to sunset this year before the state could implement the program. Lawmakers passed the controversial Senate Bill 324 earlier this year to make the program permanent, and Gov. Kate Brown signed the bill into law March 12. Brown did not immediately respond to a request for comment Monday afternoon on whether the lawsuit might affect the state’s implementation of the low-carbon fuel standard.

In their March 23 federal court filing, lawyers for the American Fuel & Petrochemical Manufacturers, American Trucking Associations Inc. and Consumer Energy Alliance said the low-carbon fuel standard violates the commerce clause of the U.S. Constitution because it discriminates against fuel imported into the state and attempts to regulate fuel production activities outside Oregon. For example, the plaintiffs stated the Oregon program was designed to close the state’s fuel market to certain types of corn ethanol and other renewable fuels and therefore interferes with “the congressional purpose of ensuring a continued market nationwide for this corn ethanol.”

The trucking association issued a pointed statement, the Portland Business Journal reports.

“The Oregon program is set up to give a big boost to Oregon’s small biofuel industry, without reducing net greenhouse gas emissions, and at the expense of higher fuel costs for everyone,” said Glen Kedzie, vice president for energy and environmental affairs for ATAsaid in a news release.

“Unfortunately for Oregon, the Constitution doesn’t allow states to set up these kinds of trade barriers in order to promote in-state businesses, nor does it allow Oregon to regulate how fuel is produced in other states.”

The Register-Guard describes failed efforts to stall a similar program in California:

Opponents of a similar standard in California have tried several legal avenues to block that program — none of which has succeeded in killing it. An ethanol producer similarly sued the California program over its rules. In 2013, the California Court of Appeals required the program to be frozen until several changes were made to those rules. Those changes have now been finalized and the program is expected to ramp up rapidly in coming years.

A potentially more damaging lawsuit, brought by an alliance of oil companies and corn-based ethanol producers, claimed that California’s low-carbon-fuel standard violated the U.S. Constitution’s commerce clause by discriminating against out-of-state companies. A U.S. District judge initially found for the plaintiffs. But the Ninth U.S. Circuit Court of Appeals reversed that ruling, allowing California’s program to move forward. Last year, the U.S. Supreme Court declined to review that decision.