OTA Dispatch Issue 3

Oregon Trucking Associations, Inc. Oregon Truck Dispatch Waylon Buchan OTA Director of Government Affairs LEGISLATIVE UPDATE 6 “CAP AND TRADE” regulations have been a hot topic for legislators this year. The concept also goes by other labels, such as “Cap and Invest” or a more recent variant, “Clean Energy Jobs.” So what exactly are these policies supposed to accomplish, and how do they work? A Cap and Trade system functions by setting a legal cap, or limit, on the amount of greenhouse gasses allowed into Oregon’s air. Businesses that exceed the cap must buy credits or “allowances” to balance their books during a given period. These credits can be traded between the state or businesses in a market, similar to a stock exchange. In theory, this system will increase the cost of doing business for Oregon manufacturing, utilities, mills, processing, fuel distribution and much more. Practically speaking, businesses are faced with the choice of passing these additional compliance costs along to the consumer, or to divert revenue toward infrastructure which reduces the carbon footprint of their operation. This satisfies Cap and Trade proponents because it sends ‘carbon signals,’ discourages carbon-intensive products, and reduces Oregon’s total greenhouse gas output. In a nutshell, that is the premise of Cap and Trade. So, what’s wrong with this concept and why should the Oregon trucking industry care? I’ll give you three reasons. First, by applying Cap and Trade to fuel, it would likely create a significant increase in the price of motor fuels, particularly diesel. Early studies indicate that Cap and Trade could increase fuel prices by 10 to 20 cents per gallon, on top of the tax increases in the transportation package passed in 2017. With high costs and low margins, such a program could be disastrous for the trucking industry and for Oregon’s economy. Furthermore, lawmakers are far from any determination about how the state would collect and spend the revenue under Cap and Trade, and both of these issues are tremendously important to the trucking industry in Oregon. Revenue collection under Cap and Trade is certainly going to run into issues with the constitutional provisions which protect the highway trust fund. While fuels may be included under the cap, Article 9, section 3a of Oregon’s constitution states that “Any tax levied on, with respect to, or measured by the storage, withdrawal, use, sale, distribution, importation or receipt of motor vehicle fuel or any other product used for the propulsion of motor vehicles…” must be sent to the state highway fund. Once captured by the highway fund, these revenues may only be used for the “construction, reconstruction, improvement, repair, maintenance, operation and use of public highways, roads, streets and To join or donate, go to www.ortrucking.org/ truck-pac! Government Affairs Update