Lawsuit Looms Over Carbon Regs

As state agencies move forward with Gov. Kate Brown’s executive order to curtail carbon emissions, an alliance of oil and gas consumers set the stage for a legal battle. 

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On March 10th, surrounded by children, climate-change activists and renewable energy advocates, Gov. Brown made good on her pledge to reduce greenhouse gas emissions if the Legislature failed to do so. Executive Order 20-04, or the The Oregon Climate Action Plan, tasked 16 state agencies with adopting new standards and oversight responsibilities, with the goal of reducing greenhouse gas emissions 45% below 1990 levels by 2035 and 80% by 2050.

Since issuing the executive order, 12 state agencies have submitted work plans for meeting the governor’s climate goals. Now those goals are being challenged in a court of law. 

On July 31, a coalition of energy-consuming industry groups, including the Oregon Farm Bureau, Oregon Business & Industry and the Oregon Truckers Association, filed a lawsuit against the executive order, claiming it overstepped the governor’s constitutional authority. 

The lawsuit alleges that the two weightiest sections of the executive order, the clean fuel standards for energy consumers and the cap on greenhouse gas emissions, both of which are critical to achieving the governor’s climate goals, are not within the scope of her executive power. 

“This isn’t about climate or about the specific regulations, it’s about overreach in the executive branch,” says Rick Thomas, a spokesperson for the group. “Some of the plaintiffs were neutral in the cap-and-trade fight to begin with, and are only afraid of the precedent set by the order.” 

Thomas cited Oregon Business & Industry, the largest business advocacy organization in the state, which did not take an official stance for or against cap and trade, but did express concerns about the proposal on its website. It called the potential macroeconomic consequences of cap and trade “significant,” and that the program would cause the state to “become less attractive for many large employers, especially manufacturers that are critical to the economic well-being of rural Oregon.” 

The group also acknowledged that climate change was real, and its official position was that the cap-and-trade legislative proposal was too complex for when it was debated  during the short session of  the State Legislature in 2019. 

It is not the first time that large energy consumers have taken action that delays the onset of regulations. Before the lawsuit, the Alliance of Western Energy Consumers, another business advocacy group, petitioned the governor’s office to delay implementation, citing economic pressure from the COVID-19 pandemic. Its request was ignored and is cited in the plaintiffs’ new complaint against the governor’s office. 

Tyler Pepple, executive director of the group, says the stricter standards would harm the majority of businesses struggling to get by in harsh economic conditions. 

“For most of these manufacturing companies, energy is one of their top three expenses. For some, it’s number one,” he says. “Some are doing great right now, but there are others operating on the margin that are highly sensitive. When you tack on the pandemic, it makes an untenable situation.” 

Nora Apter, climate program director at the Oregon Environmental Council, says the legal challenge represents yet another tactic to delay what she says is the future of energy, doing more long-term harm to businesses than the regulations would. By slowing innovation in the renewable energy sector, Oregon’s economy will be sluggish catching up to its neighbors, she argues. 

“This group claims to represent the best interests of Oregon businesses, when, in reality, climate inaction will only undercut our state’s economic competitiveness and growth,” she says. “As we’re thinking about how we build back better, there’s a real opportunity for continued investment and job growth in the clean and renewable energy sectors.”

Even if the litigation is successful and the executive order is reversed, the impact on large energy consumers might be difficult to anticipate. The Department of Environmental Quality (DEQ), the agency tasked with setting the newer, stricter carbon emission standards for businesses across the state, will continue as planned with its rulemaking despite the legal challenge. 

“The litigation that has been filed challenging the governor’s executive order does not challenge the authorities and responsibilities the Oregon Legislature has set for Oregon DEQ or the Environmental Quality Commission, and has not had any effect on this important work,” says DEQ communications manager Harry Esteve. 

The department has begun its work by “reaching out to Oregonians and seeking their views about what program details will work best for our state,” says Esteve. The agency intends to incorporate suggestions from citizens and businesses before it launches its formal rulemaking later this year. 

RELATED STORY: Opinion: Climate Goals Are Key to Economic Recovery

Joel Mullin, partner at law firm Stoel Rives and representative for the plaintiffs, says the case against the governor’s actions is clear-cut. 

Mullin argues that the executive order alters regulatory targets previously agreed  by the Legislature, based on climate change information from 2007. The ordinance calls for, among other things, a 75% reduction in greenhouse gas emissions by 2050, which differs from the 80% target in the governor’s order. 

The constitution says the governor cannot override laws specifically enacted by the State Legislature. “The governor does not have the authority to bypass the Legislature. This is exactly the sort of behavior they have attacked president Trump for,” he says. 

Melissa Powers, professor of environmental law at the Lewis and Clark Law School, says the case is not as clear-cut. The Republican walkout, which prevented cap-and-trade bills from being discussed in the State Legislature in 2018 and 2019, might make a judge more receptive to the governor’s actions.

Because the Legislature failed to pass new carbon emissions standards due to the two Republican walkouts, the governor is not treading on agreed statutes, she contends. 

Of the walkout, Powers argues, “The legal challengers want to say that this anti-majoritarian, anti-democratic behavior by one part of one branch of our government should take priority over our existing statutes. That isn’t how our constitution works and it isn’t how our constitution should work.”

Mullin disagrees, saying that the Legislature’s actions are clear, based on the standards they accepted 13 years ago. “It’s plain as day that the Legislature has acted,” he says. “They tried twice, they failed twice. For better or worse, this is the system of government we have.” 

Mullin intends to make the case that in order for the governor’s actions to be considered constitutional, the governor’s office must prove Gov. Brown had the authority to give executive orders with or without the Legislature’s failure to act. A threshold he says the defense is unlikely to meet. 

Even without the walkouts, or the fight over cap and trade, Powers says the executive order fits within the scope of the executive power. She cites air quality statutes, which give agencies broad authority to regulate air contaminants, as well as low-carbon fuel standards that direct state agencies to lower the carbon intensity of fuels, as examples of executive powers. 

“It does not matter that other laws did not pass, so long as existing laws give agencies and the governor authority to implement existing laws,” says Powers. 

She cites former California governor Arnold Schwarzenegger’s similar executive order in 2005 as legal precedent. 

She also notes that the 2007 ordinance cited by the plaintiffs sets the goal of at least a 75% reduction in carbon emissions by 2050. 

For some businesses already transitioning to clean and renewable energy, the actions of the coalition have been frustrating. As businesses look to a future in which lower carbon emissions are the norm, either by law or by popular demand, the back and forth deters companies from investing in the latest technologies while they compete with cheaper, more polluting fuel sources. 

“The plaintiffs listed in this lawsuit don’t speak for all businesses across Oregon,” says Keith Wilson, president of Titan Trucking. He says the Clean Fuels Program, which would be expanded by the governor’s order, has been “instrumental” in allowing his company to become more profitable than it was  using petroleum diesel. 

“I am extremely frustrated to see this latest attempt to stop businesses like mine from investing in the newest and cleanest technologies,” he says.

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