OTA Dispatch Issue 2 2020

Oregon Trucking Associations, Inc. Oregon Truck Dispatch Waylon Buchan OTA Director of Government Affairs LEGISLATIVE UPDATE 6 WITH THE ENTIRE world focused on the COVID-19 pandemic and the economy in freefall, it is quite understandable if you have not thought about issues like “cap and trade” for a while. It makes sense if you look at the timeline of the last several months. Democrat leadership closed the book on cap and trade just as they were turning the first pages of the COVID-19 outbreak. Governor Brown released Executive Order 20-03, declaring a state of emergency for COVID-19 on March 8, 2020. It only took two days for Governor Brown to release Executive Order 20-04, directing state agencies to begin reducing and regulating greenhouse emissions in Oregon. Democrats held a press conference, did a victory lap, and washed their hands of cap and trade for the time being. But for those of us who have been batting these heavy-handed greenhouse gas regulations for years, it has been an all-consuming fight. Priority number one. The main event. And now, after two spectacular legislative failures in a row, Democrats have their flagship program in place. Well, at least some version of it, anyway. What’s the difference? Why does it matter whether the legislature implements Cap and Trade with a 400-page bill or the Governor does it with a 14-page order? Who pays, how much, and where does the money go? EO 20-04 directed state agencies to begin implementation of plans to reduce greenhouse gas emissions in Oregon. In addition, the order set a “cap” on statewide emissions and mandated GHG emission reductions to at least 45% below 1990 emission levels by the year 2035, and at least 80% below 1990 emissions levels by the year 2050. The order directs the Department of Environmental Quality to double the intensity of the Oregon Low Carbon Fuel Standard (LCFS). This new “cap” applies to both large stationary sources of GHG emissions as well as emissions from transportation fuels, including diesel and gasoline. The Governor arguably exceeded her executive branch authority and took actions constitutionally delegated to the legislature in at least two ways. First, Governor Brown reset the previously enacted legislative greenhouse gas emission reduction goals, made them more stringent, and turned them from aspirational goals to mandatory benchmarks. Governor Brown overstepped again by modifying the preexisting carbon intensity standard under the LCFS, from 10% over a 10-year period to 20% by the year 2035. In other words, the Governor attempted to “legislate” cap and trade into existence from the executive branch using authority she does not have, to modify programs she did not create. If the legislature intended to lock in statutory 1990 emission benchmarks or alter the framework of the Low Carbon Fuel Standard—the vote count would demonstrate that. Like the legislative proposals before it, this executive version of cap and trade will increase the price of transportation fuels like gasoline and diesel in order to push consumers toward use of low or zero-emission alternatives. One stark difference is how these cost increases occur. In the legislative arena, lawmakers ordinarily raise transportation revenues through taxes and fees on fuel and vehicles. In the case of cap and trade, the legislative intent was to impose higher costs through a state-managed market. The state would release “credits” or “allowances” into this market, and regulated entities like fuel importers would have to purchase these in order to comply with the mandatory program. Money comes into the treasury, fuel prices increase. This approach begs the question about whether these revenues are constitutionally dedicated to the Highway Trust Fund, opening another debate altogether regarding use of funds—should it go toward building transportation infrastructure, or can it be used for other unrelated pet projects? EO 20-04 is a different animal entirely. It does not directly impose taxes or fees, nor does it immediately establish a mandatory market or sell credits to companies. This is reflective of the limitations placed on the executive branch—it cannot directly raise revenues from the population because that power is reserved for the legislature. But make no mistake, we are not dealing with a Cap and Trade Lite™ program that we can simply overlook, because an executive branch cap and trade system comes with several serious problems. First, it immediately enhances the potency of existing programs which are already designed to increase the costs of “mainstream” fossil fuels like gasoline and diesel over time. Normally, agencies work at a glacial pace and might not implement Legislative Update 2020 As the most expensive state in the nation in which to operate a heavy truck, it is time for Oregon to get our priorities straight.