Petition for Writ of Certiorari — American Fuel & Petrochemical Manufacturers, et al., Petitioners v. Jane O’Keeffe, et al.

APPENDIX

1a

APPENDIX A

UNITED STATES COURT OF APPEALS

NINTH CIRCUIT

————

No. 15-35834

————

AMERICAN FUEL & PETROCHEMICAL MANUFACTURERS;

AMERICAN TRUCKING ASSOCIATIONS, INC.,

A TRADE ASSOCIATION; CONSUMER ENERGY

ALLIANCE, A TRADE ASSOCIATION,

Plaintiffs-Appellants,

v.

JANE O’KEEFFE; ED ARMSTRONG; MORGAN RIDER;

COLLEEN JOHNSON; MELINDA EDEN; DICK PEDERSEN;

JONI HAMMOND; WENDY WILES; DAVID COLLIER;

JEFFREY STOCUM; CORY-ANN WIND; LYDIA EMER;

LEAH FELDON; GREG ALDRICH; AND SUE LANGSTON,

IN THEIR OFFICIAL CAPACITIES AS OFFICERS AND

EMPLOYEES OF THE OREGON DEPARTMENT OF

ENVIRONMENTAL QUALITY; ELLEN F. ROSENBLUM, IN

HER OFFICIAL CAPACITY AS ATTORNEY GENERAL OF THE

STATE OF OREGON; KATE BROWN, IN HER OFFICIAL

CAPACITY AS GOVERNOR OF THE STATE OF OREGON,

Defendants-Appellees,

and

CALIFORNIA AIR RESOURCES BOARD;

STATE OF WASHINGTON; OREGON ENVIRONMENTAL

COUNCIL; SIERRA CLUB; NATURAL RESOURCES

DEFENSE COUNCIL; ENVIRONMENTAL DEFENSE

FUND; CLIMATE SOLUTIONS,

Intervenor-Defendants-Appellees.

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————

Argued and Submitted March 6,

2018—Portland, Oregon

Filed September 7, 2018

————

OPINION

Before: Raymond C. Fisher, N. Randy Smith, and

Andrew D. Hurwitz, Circuit Judges.

HURWITZ, Circuit Judge

This case requires us to decide whether an Oregon

program regulating the production and sale of transportation fuels based on greenhouse gas emissions

violates the Commerce Clause, U.S. Const. art. I, § 8,

cl. 3, or is preempted by § 211(c) of the Clean Air Act

(“CAA”), 42 U.S.C. §§ 7401, 7545. The district court

dismissed a complaint challenging the Oregon program. We affirm.

I. Background

A. The Oregon Program

In 2007, the Oregon legislature found that “[g]lobal

warming poses a serious threat to the economic wellbeing, public health, natural resources and environment of Oregon,” and identified “a need to . . . take

necessary action to begin reducing greenhouse gas

emissions.” Or. Rev. Stat. § 468A.200(3), (7). The legislature accordingly created the Oregon Clean Fuels

Program (the “Oregon program”) and instructed the

Oregon Environmental Quality Commission (“OEQC”)

to adopt rules to decrease lifecycle greenhouse gas

emissions from transportation fuels produced in or

imported into Oregon. Or. Rev. Stat. §§ 468A.266–268.

Between 2010 and 2015, the OEQC promulgated rules

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designed to reduce greenhouse gas emissions from use

and production of transportation fuels in Oregon to at

least 10% lower than 2010 levels by 2025. See Or.

Admin. R. 340-253-0000-8100.1

Under these rules, a regulated party must keep the

average carbon intensity2 of all transportation fuels

used in Oregon below an annual limit. See id. 340-2530100(6), -8010, -8020. The annual carbon intensity

limits become more stringent annually through 2025.

See id.3

A fuel with a carbon intensity below the limit

generates a credit, and one with a carbon intensity

above the limit generates a deficit. See id. 340-2530040(30), (35), -1000(5). Regulated parties must generate carbon intensity “credits” greater than or equal to

their “deficits” on an annual basis. Regulated parties

can buy or sell credits, store them for future use, or use

them to offset immediate deficits. Thus, a “regulated

party may demonstrate compliance in each compliance

period either by producing or importing fuel that in

the aggregate meets the standard or by obtaining

sufficient credits to offset the deficits it has incurred

1

The regulations were incorporated by reference into American Fuel’s complaint. The parties have also included the regulations in motions for judicial notice, Dkt. 13, 37, 52, which we

GRANT.

2

“‘Carbon intensity’ or ‘CI’ means the amount of lifecycle

greenhouse gas emissions per unit of energy of fuel expressed in

grams of carbon dioxide equivalent per megajoule (gCO2e/MJ).”

Or. Admin. R. 340-253-0040(20).

3

Regulated fuel importers or producers must (1) register with

the Oregon Department of Environmental Quality (“ODEQ”)

and (2) report the volumes and carbon intensities of their

transportation fuels. Or. Admin. R. 340-253-0100.

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for such fuel produced or imported into Oregon.” Id.

340-253-0100(6).

The cumulative carbon intensity value attributed

to the lifecycle of a particular type of fuel is called

a “pathway.” Id. 340-253-0040(46) (“‘Fuel pathway’

means a detailed description of all stages of fuel

production and use for any particular transportation

fuel, including feedstock generation or extraction, production, distribution, and combustion of the fuel by the

consumer. The fuel pathway is used to calculate the

carbon intensity of each transportation fuel.”); see also

Rocky Mountain Farmers Union v. Corey, 730 F.3d

1070, 1081 (9th Cir. 2013) (noting a similar definition

in California’s Low Carbon Fuel Standard (“LCFS”)).

The first phase of Oregon rules provided tables with

default pathways for various fuels, “including feedstock generation or extraction, production, distribution, and combustion of the fuel by the consumer.”

Or. Admin. R. 340-253-0040(46), -0400(1). During this

phase, regulated parties could either use the default

pathways, or seek approval for individualized pathways. Id. 340-253-0400(3), -0450.

The second phase of the Oregon rules introduced

a scientific modeling tool called OR-GREET, based

on “the Greenhouse gases, Regulated Emissions, and

Energy in Transportation (GREET) model developed

by Argonne National Laboratory” to calculate individualized pathways for nonpetroleum fuels. Id. 340-2530040(67), -0400(1); see also Rocky Mountain, 730 F.3d

at 1080–84 (describing California LCFS, which also

uses GREET modeling tools). The OR-GREET employs

a “lifecycle analysis” to determine total carbon intensity, which includes emissions from the production,

storage, transportation, and use of the fuels, thus

accounting for “all stages of fuel production.” Or.

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Admin. R. 340-253-0040(46). The lifecycle analysis

allows a state to account for ‘‘the climate-change

benefits of biofuels such as ethanol, which mostly

come before combustion.’’ Rocky Mountain, 730 F.3d at

1081. Lifecycle analysis also allows for an accurate

comparison of the carbon effects of fuels produced

using different production methods and source materials. See id. (“An accurate comparison is possible only

when it is based on the entire lifecycle emissions of

each fuel pathway.”).

Producers and importers of ethanols and biodiesels

can obtain carbon intensity scores in one of three ways.

If a fuel has been assigned a carbon intensity score

under the California LCFS, a regulated party can

have that value adjusted for use in Oregon. Or. Admin.

R. 340-253-0400(4)(a). Regulated parties can also use

individualized carbon intensity scores calculated

using the OR-GREET modeling tool. Id. 340-253-0500.

If it is not possible to obtain an individualized value, a

regulated party may also use a default pathway to

report carbon intensity. See id. 340-253-0450.4 “Thus

fuel producers can take advantage of default and individualized carbon intensity values, and choose what

is most advantageous.” Rocky Mountain, 730 F.3d at

1082.

Because of the uniquely harmful environmental effects

of petroleum-based fuels, importers of petroleumbased gasoline and diesel—unlike producers and

importers of other fuels—are required to use average

4

The second phase of rules provides two default ethanol

pathways—Midwest and Oregon averages—which assume

production using the same inputs but different energy sources.

Or. Admin. R. 340-253-8030, tbl. 3. These pathways are used only

until an individual pathway is approved. Id. 340-253-0400(4)(b),

-0450(3).

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carbon intensity pathways, based on the average

carbon-intensity values of such fuels in Oregon.5 Or.

Admin R. 340-253-0400(3)(a). This requirement was

designed to promote the use and development of alternative fuels, because reliance solely on petroleumbased fuels would make targeted emissions reductions

unattainable. See Rocky Mountain, 730 F.3d at 1085

(“No matter how efficiently crude oil is extracted

and refined, it cannot supply [the targeted] level of

reduction. To meet California’s ambitious goals, the

development and use of alternative fuels must be

encouraged.”).

B. Procedural Background

In March 2015, the American Fuel and Petrochemical Manufacturers, American Trucking Associations,

and Consumer Energy Alliance (collectively, “American Fuel”) filed this action against officials of the

ODEQ and OEQC (the “Oregon defendants”), alleging

that the Program violated the Commerce Clause and

was preempted by § 211(c) of the CAA.6 The district

5

See Rocky Mountain, 730 F.3d at 1084 (“Crude oil presents

different climate challenges from ethanol and other biofuels.

Corn and sugarcane absorb carbon dioxide as they grow, offsetting emissions released when ethanol is burned. By contrast, the

carbon in crude oil makes a one-way trip from the Earth’s crust

to the atmosphere. For crude oil and its derivatives, emissions

from combustion are largely fixed, but emissions from production

vary significantly. As older, easily accessible sources of crude are

exhausted, they are replaced by newer sources that require more

energy to extract and refine, yielding a higher carbon intensity

than conventional crude oil.”).

6

The plaintiffs are national trade associations. American

Fuel’s members include nearly all United States refiners and

petrochemical manufacturers, and sell transportation fuels

throughout Oregon. A number of American Fuel’s members produce and sell gasoline, diesel, and ethanol used as transportation

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court granted motions to intervene by several conservation organizations (the “Conservation Intervenors”),7 the California Air Resource Board, and the

State of Washington (the “State Intervenors”). The

Oregon defendants moved to dismiss the complaint

for failure to state a claim upon which relief can be

granted under Federal Rule of Civil Procedure 12(b)(6),

and the State Intervenors moved for judgment on the

pleadings under Rule 12(c). The district court granted

both motions, finding American Fuel’s claims “largely

barred” by this court’s decision in Rocky Mountain

about a virtually identical California program. The

district court also concluded that the Oregon program

did not discriminate in purpose or effect against outof-state ethanol and was not preempted by the CAA.

We review the district court’s judgment de novo,

taking well-pleaded allegations of material fact as

true and construing the complaint in the light most

favorable to American Fuel. AlliedSignal, Inc. v. City

of Phoenix, 182 F.3d 692, 695 (9th Cir. 1999).

II. The Commerce Clause

The Commerce Clause grants Congress the power

“[t]o regulate Commerce with foreign Nations, and

among the several States, and with the Indian tribes.”

U.S. Const. art. I, § 8, cl. 3. Despite its textual focus

solely on congressional power, the Clause also “has

fuels in Oregon, and several import such gasoline, diesel, and

ethanol into Oregon. Members of the American Trucking Association purchase transportation fuels in Oregon for use in Oregon.

The Consumer Energy Alliance’s members include industrial

consumers and producers of gasoline, diesel, and ethanol.

7

The Conservation Intervenors are the Oregon Environmental

Council, the Sierra Club, the Environmental Defense Fund,

Climate Solutions, and the Natural Resources Defense Council.

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long been understood to have a ‘negative’ aspect that

denies the States the power unjustifiably to discriminate against or burden the interstate flow of articles

of commerce.” Or. Waste Sys., Inc. v. Dep’t of Envtl.

Quality of State of Or., 511 U.S. 93, 98, 114 S.Ct. 1345,

128 L.Ed.2d 13 (1994). This so-called “dormant” Commerce Clause is “driven by concern about ‘economic

protectionism—that is, regulatory measures designed

to benefit in-state economic interests by burdening

out-of-state competitors.’” Dep’t. of Revenue of Ky. v.

Davis, 553 U.S. 328, 337–38, 128 S.Ct. 1801, 170

L.Ed.2d 685 (2008) (quoting New Energy Co. of Ind. v.

Limbach, 486 U.S. 269, 273–74, 108 S.Ct. 1803, 100

L.Ed.2d 302 (1988)); see also South Dakota v. Wayfair,

Inc., ––– U.S. –––, 138 S.Ct. 2080, 2089, 201 L.Ed.2d

403 (2018) (noting that the Commerce Clause was

enacted to combat “the tendencies toward economic

Balkanization that had plagued relations among the

Colonies and later among the States” (quoting Hughes

v. Oklahoma, 441 U.S. 322, 325–26, 99 S.Ct. 1727, 60

L.Ed.2d 250 (1979)).

But, courts considering dormant Commerce Clause

challenges must “respect a cross-purpose as well, for

the Framers’ distrust of economic Balkanization was

limited by their federalism favoring a degree of local

autonomy.” Davis, 553 U.S. at 338, 128 S.Ct. 1801.

Thus, we must uphold a nondiscriminatory law against

a dormant Commerce Clause challenge “unless the

burden imposed on [interstate] commerce is clearly

excessive in relation to the putative local benefits.”

Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct.

844, 25 L.Ed.2d 174 (1970).

In Rocky Mountain, we considered a challenge to the

California LCFS, on which the district court accurately noted the Oregon program was modeled and to

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which it is analogous in all relevant respects. As in the

Oregon program, parties regulated under the LCFS

generate credits or deficits based on their carbon

intensity scores, which are calculated through a

GREET modeling tool. Rocky Mountain, 730 F.3d at

1080–82. In Rocky Mountain, we largely upheld the

LCFS against a Commerce Clause challenge, remanding for further proceedings on an issue not addressed

by the district court: whether the LCFS discriminated

against out-of-state ethanol in purpose or effect. Id. at

1078.8

We thus begin from the premise established in Rocky

Mountain: state regulation violates the dormant Commerce Clause if it discriminates against out-of-state

economic interests (in either purpose or effect) or if

it regulates conduct occurring entirely outside of a

state’s borders. Id. at 1087, 1101–02. In contrast, we

will uphold regulations that accord all fuels “the

substantially evenhanded treatment demanded by the

Commerce Clause.” Id. at 1094 (quoting Boston Stock

8

On remand, the district court concluded that the Program

did not discriminate in purpose or effect against out-of-state

petroleum. Rocky Mountain Farmers Union v. Goldstene, No.

1:09-cv-02234, 2014 WL 7004725, at *14–15 (E.D. Cal. Dec. 11,

2014). The court later held that the Program did not purposefully

discriminate against out-of-state ethanol, but, because of changes

in the manner in which California calculated its carbon intensity

scores, twice denied motions to dismiss the claim that the

Program had a discriminatory effect on out-of-state ethanol.

Rocky Mountain Farmers Union v. Corey, 258 F.Supp.3d 1134,

1158, 1163 (E.D. Cal. 2017); Memorandum Decision and Order,

Rocky Mountain Farmers Union v. Corey, No. 1:09-cv-02234-LJOBAM (E.D. Cal. Aug. 3, 2015), ECF No. 343. These subsequent

denials are discussed in greater depth in Part II(A)(iii)(a), infra.

The plaintiffs voluntarily dismissed their remaining claims and

filed an appeal, which is pending in this court.

10a

Exch. v. State Tax Comm’n, 429 U.S. 318, 332, 97 S.Ct.

599, 50 L.Ed.2d 514 (1977)).

A. Discrimination

i. Facial Discrimination

American Fuel’s claim that the Program facially

discriminates against out-of-state fuels by assigning

petroleum and Midwest ethanol higher carbon intensities than Oregon biofuels is squarely controlled by

Rocky Mountain. Like its California counterpart, the

Oregon program discriminates against fuels based on

lifecycle greenhouse gas emissions, not state of origin.

See Rocky Mountain, 730 F.3d at 1090.

A state may not discriminate “against articles of

commerce coming from outside the State unless there

is some reason, apart from their origin, to treat them

differently.” City of Philadelphia v. New Jersey, 437

U.S. 617, 626–27, 98 S.Ct. 2531, 57 L.Ed.2d 475

(1978). But, the Oregon program distinguishes among

fuels not on the basis of origin, but rather on carbon

intensity. Out-of-state fuels are not necessarily

disfavored: when the complaint was filed, the Program

assigned twelve out-of-state ethanols, including five

Midwest ethanols, lower carbon intensities than those

assigned to Oregon biofuels.9 The fact that the

Program labels fuels by state of origin does not render

it discriminatory, as these labels are not the basis

for any differential treatment. See Rocky Mountain,

730 F.3d at 1097 (“California’s reasonable decision to

use regional categories in its default pathways . . .

does not transform its evenhanded treatment of

9

More recent carbon intensity scores—including those submitted with American Fuel’s motion for judicial notice—also make

plain that out-of-state fuels are not systematically disfavored. See

Or. Admin. R. 340-253-8030, -8040.

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fuels based on their carbon intensities into forbidden

discrimination.”).

ii. Discriminatory Purpose

Citing statements by former Oregon Governor John

Kitzhaber and various Oregon legislators, American

Fuel next alleges that the Oregon program was

enacted with the intent to “foster Oregon biofuels

production at the expense of existing out-of-state fuel

producers.” But, the stated purpose of the Program is

simply to “reduce Oregon’s contribution to the global

levels of greenhouse gas emissions and the impacts of

those emissions in Oregon”—in particular, to “reduce

the amount of lifecycle greenhouse gas emissions per

unit of energy by a minimum of 10 percent below 2010

levels by 2025.” Or. Admin. R. 340-253-0000(1), (2). “We

will ‘assume that the objectives articulated by the

legislature are actual purposes of the statute, unless

an examination of the circumstances forces us to

conclude that they could not have been a goal of the

legislation.’” Rocky Mountain, 730 F.3d at 1097–98

(quoting Minnesota v. Clover Leaf Creamery Co., 449

U.S. 456, 463 n.7, 101 S.Ct. 715, 66 L.Ed.2d 659

(1981)).

The district court did not err in finding that the

statements by Oregon public officials cited in American Fuel’s complaint do not demonstrate that the

objectives identified by the legislature were not the

true goals of the Program. Even construing the allegations in the complaint in the light most favorable to

American Fuel, the statements cited, “do not plausibly

relate to a discriminatory design and are ‘easily

understood, in context, as economic defense of a [regulation] genuinely proposed for environmental reasons.’” Id. at 1100 n.13 (alteration in original) (quoting

Clover Leaf Creamery Co., 449 U.S. at 463 n.7, 101

12a

S.Ct. 715). The statements of the Oregon officials are

no more probative of a discriminatory or protectionist

purpose than the statements by California state officials we found insufficient to establish discriminatory

purpose in Rocky Mountain. Id.10

None of the statements cited by American Fuel

undermines the Oregon program’s stated purpose.

One of the allegedly discriminatory statements of former Governor Kitzhaber, for example, explicitly attributed the Program’s favorable treatment of biofuels

to the fact that “natural gas transmissions and generation emit 50 percent less greenhouse gas than burning

coal.” See generally Ashcroft v. Iqbal, 556 U.S. 662,

10

Compare Mem. in Supp. of Mot. Summ. J., Rocky Mountain

Farmers Union v. Goldstene, No. 1:09-cv-02234-LJO-BAM (E.D.

Cal. Nov. 1, 2010), ECF No. 112 (quoting remarks by California

state officials promoting the benefits of the LCFS, including the

prospect that the program would “keep more money in the State”

and “ensure that a significant portion of the biofuels used in the

LCFS are produced in California”), with Compl., Am. Fuel &

Petrochemical Mfrs. v. O’Keeffe, No. 3:15-cv-00467-AA (D. Or.

March 23, 2015), ECF No. 1 (citing statements by former

Governor Kitzhaber that the Oregon program would “provide

important economic benefits to Oregon’s economy” and “keep

capital circulating in our region through local sourcing and

supply chains while reducing our dependence on carbon-intensive

fuels.” (quoting J. Kitzhaber, 10-Year Energy Action Plan 37 (Dec.

14, 2012))). American Fuel also cites a statement from an

advisory committee member that the LCFS “will create net jobs,

make net improvements for household income, and be beneficial

for Oregon’s Gross State Product.” See Advisory Final Report,

Appx. A, Summary of Advisory Committee Input at 142 (2010),

http://library.state.or.us/repository/2011/201102081424462/appe

ndixA.pdf. These statements merely represent feedback and

recommendations from stakeholders consulted during the rulemaking process; under the same subheading, another committee

member offered the critique that “more can be done to incentivize

low carbon fuels within the state.” Id.

13a

678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (“Where

a complaint pleads facts that are ‘merely consistent

with’ a defendant’s liability, it ‘stops short of the line

between possibility and plausibility of entitlement to

relief.’” (quoting Bell Atl. Corp. v. Twombly, 550 U.S.

544, 557, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007))).

Our federal system recognizes “each State’s freedom

to ‘serve as a laboratory; and try novel social and

economic experiments.’” San Antonio Indep. Sch. Dist.

v. Rodriguez, 411 U.S. 1, 50, 93 S.Ct. 1278, 36 L.Ed.2d

16 (1973) (quoting New State Ice Co. v. Liebmann, 285

U.S. 262, 280, 52 S.Ct. 371, 76 L.Ed. 747 (1932)

(Brandeis, J., dissenting)). This freedom would be

meaningless if officials could not promote the economic

benefits of these experiments to their states without

running afoul of the Commerce Clause. For this reason, regulations “justified by a valid factor unrelated

to economic protectionism” are permissible, even if

they benefit a state’s economy. New Energy Co., 486

U.S. at 274, 108 S.Ct. 1803.

It is well settled that the states have a legitimate

interest in combating the adverse effects of climate

change on their residents. Massachusetts v. EPA, 549

U.S. 497, 522–23, 127 S.Ct. 1438, 167 L.Ed.2d 248

(2007). “Air pollution prevention falls under the broad

police powers of the states, which include the power to

protect the health of citizens in the state.” Exxon Mobil

Corp. v. U.S. Envtl. Prot. Agency, 217 F.3d 1246, 1255

(9th Cir. 2000). The complaint does not allege that

the Oregon program was enacted for the purpose of

supporting a uniquely local industry. Cf. Bacchus

Imports, Ltd. v. Dias, 468 U.S. 263, 271, 104 S.Ct.

3049, 82 L.Ed.2d 200 (1984) (finding a discriminatory

purpose behind tax exemptions for two liquors produced in Hawaii because it was “undisputed that the

14a

purpose of the exemption was to aid Hawaiian industry”). The district court therefore correctly rejected the

argument that the complaint plausibly alleged that

the Program was discriminatory in purpose.

iii. Discriminatory Effect

A facially neutral statute can violate the Commerce

Clause if it effectuates “differential treatment of

in-state and out-of-state interests that benefits the

former and burdens the latter.” Or. Waste Sys., Inc.,

511 U.S. at 99, 114 S.Ct. 1345. But, even assuming

that the in-state and out-of-state fuels at issue in this

case are similarly situated, American Fuel’s complaint

does not state a claim based on discriminatory effects.

See Rocky Mountain, 730 F.3d at 1089 (“All factors

that affect carbon intensity are critical to determining

whether the Fuel Standard gives equal treatment to

similarly situated fuels.”).

a. Burdens on Out-of-State Fuels

American Fuel argues that the Program’s assignment of credits and deficits creates an impermissible

burden on producers or importers of petroleum and

Midwest ethanols, who must purchase credits, and

provides an impermissible benefit to Oregon biofuel

producers, who can generate and can sell credits.

The argument fails. On its face, the Oregon program

assigns credits and deficits to fuels evenhandedly

based on a “reason, apart from [their] origin”: carbon

intensity. Or. Waste Sys., Inc., 511 U.S. at 101 n.5, 114

S.Ct. 1345. The number of credits assigned to fuels

does not depend on their state of origin. See also Rocky

Mountain, 730 F.3d at 1089 (finding no discrimination

under the LCFS, which “does not base its treatment

on a fuel’s origin but on its carbon intensity”).

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And, American Fuel has not plausibly alleged that

the application of these neutral criteria has a discriminatory effect. Many out-of-state producers generate

credits, and several fare better in this respect than

Oregon producers of the same fuels. Indeed, even

factoring in transportation emissions does not neatly

divide in-state and out-of-state producers, because

“[t]ransportation emissions reflect a combination of:

(1) distance traveled . . . ; (2) total mass and volume

transported; and (3) efficiency of the method of transport.” Id. at 1083; see, e.g., State of Or. Dep’t of Envtl.

Quality, Oregon-Approved Carbon Intensity Values

for 2016 (2016) (hereinafter “ODEQ 2016 Report”)

(assigning lower carbon-intensity scores to renewable

diesels and biofuels from Arkansas, Louisiana, Texas,

South Korea, China, and Canada than to Oregon biofuels, and lower carbon-intensity scores to numerous

out-of-state ethanols than to Oregon-produced ethanols); Or. Admin. R. 340-253-8030, -8040. Given its

scoring system, the Program does not require or even

incentivize “an out-of-state operator to become a resident in order to compete on equal terms.” Halliburton

Oil Well Cementing Co. v. Reily, 373 U.S. 64, 72, 83

S.Ct. 1201, 10 L.Ed.2d 202 (1963).

Under the Oregon program, producers of higher

carbon-intensity fuels are disfavored relative to all

lower carbon-intensity fuels, including those produced

outside of Oregon. This is plainly permissible. A state

“may regulate with reference to local harms, structuring its internal markets to set incentives for firms

to produce less harmful products for sale” within its

borders. Rocky Mountain, 730 F.3d at 1104; see also

Exxon Corp. v. Governor of Maryland, 437 U.S. 117,

127, 98 S.Ct. 2207, 57 L.Ed.2d 91 (1978) (holding that

“interstate commerce is not subjected to an impermiss-

16a

ible burden simply because an otherwise valid regulation causes some business to shift from one interstate

supplier to another”). The Commerce Clause “protects

the interstate market, not particular interstate firms.”

Exxon Corp., 437 U.S. at 127, 98 S.Ct. 2207.

American Fuel alleges that “to compete in the

Oregon market, producers of high carbon-intensity

fuels must change the manner in which they produce

and transport fuels to obtain lower carbon-intensity

scores to avoid the commercial disadvantage placed on

their higher carbon-intensity fuels.” But this allegation merely affirms that the Program targets differences in production methods that affect greenhouse

gas emissions “based on the real risks posed by different sources of generation,” something we have

squarely held “is not a dormant Commerce Clause

violation.” Rocky Mountain, 730 F.3d at 1092.

This is because the OR-GREET model considers in

its calculation of carbon intensities emissions from the

growth of inputs into the production of fuels, such as

corn; efficiency of production, including electricity or

fuel used for energy; milling processes; conversion of

land for production; and transportation of fuels and

feedstock into its calculations of carbon intensities

[sic]. See id. at 1082–83 (upholding use of analogous

GREET model in regulation in California). Accordingly, carbon intensity scores for ethanol vary widely

under the Oregon program, ranging in January 2016

from 7.49 (Brazilian sugarcane ethanol) to as high as

98.59 (Midwest coal ethanol). See State of Or. Dep’t

of Envtl. Quality, Oregon-Approved Carbon Intensity

Values for 2016 (2016). But, some of the lowest carbon

intensity scores are also assigned to Midwest producers. See id. at 8–11 (assigning values to Midwest

ethanols ETHC036, ETHC056, ETCH073-75 [sic], and

17a

ETHC089-90 lower than the value of Oregon ethanol).

“The dormant Commerce Clause does not require [a

state] to ignore the real differences in carbon intensity

among out-of-state ethanol pathways,” including emissions from transporting fuels and other “important

contributors to GHG emissions.” Rocky Mountain, 730

F.3d at 1088, 1093.

Nor does the Oregon program eliminate a competitive advantage that producers of higher carbonintensity fuels have earned. Cf. Hunt v. Wash. State

Apple Advert. Comm’n, 432 U.S. 333, 351, 97 S.Ct.

2434, 53 L.Ed.2d 383 (1977) (striking down a North

Carolina regulation that had “the effect of stripping

away from the Washington apple industry the competitive and economic advantages it has earned for

itself through its expensive inspection and grading

system”). A state may favor environmentally friendly

production methods over others with more harmful

effects. See Clover Leaf Creamery Co., 449 U.S. at 473,

101 S.Ct. 715. And, “[a]ccess to cheap electricity is an

advantage, but it was not ‘earned’ . . . simply because

ethanol producers built their plants near coal-fired

power plants and imposed the hidden costs of GHG

emissions on others.” Rocky Mountain, 730 F.3d at

1092; see id. at 1091–92 (“Drawing electricity from the

coal-fired grid might be the easiest and cheapest way

to power an ethanol plant. But the dormant Commerce

Clause does not guarantee that ethanol producers may

compete on the terms they find most convenient.”);

see also Exxon Corp., 437 U.S. at 127, 98 S.Ct. 2207

(holding that the Commerce Clause does not protect

“the particular structure or methods of operation in a

retail market”).

18a

On remand, the Rocky Mountain district court held

that American Fuel had plausibly alleged a discriminatory effect on out-of-state ethanol in California

from the California program. Rocky Mountain Farmers

Union, 258 F.Supp.3d at 1163; Mem. Decision &

Order, Rocky Mountain Farmers Union v. Corey, No.

1:09-cv-02234-LJO-BAM (E.D. Cal. Aug. 3, 2015), ECF

No. 343. But, that finding is of no aid to American Fuel

here, as it was based on an allegation that California

had changed the way it calculated carbon intensity

scores so as to “assign artificially lower CI scores to

California-produced ethanol while assigning artificially higher CI scores to ethanol produced elsewhere,

particularly in the Midwest.” Rocky Mountain Farmers

Union, 258 F.Supp.3d at 1159. There is no allegation

of a similar change here. Nothing in the complaint in

this case suggests that Midwest ethanol’s scores are

“artificially” high—only that they are higher than the

scores of fuels that generate lower greenhouse gas

emissions.

b. In-State Benefits

American Fuel also alleges that the Program impermissibly benefits in-state entities because Oregon

biofuels producers can generate credits. But, any benefits conferred on Oregon biofuels producers arise from

the relatively low carbon intensity of their products.

The Program assigns lower carbon intensity scores to

all biofuels (regardless of state of origin) in comparison

to other fuels because of their lower greenhouse gas

emissions. See, e.g., ODEQ 2016 Report; Or. Admin. R.

340-253-8030, -8040. Such factors “are not discriminatory because they reflect the reality of assessing and

attempting to limit GHG emissions.” Rocky Mountain,

730 F.3d at 1093.

19a

And, biofuels are not a “uniquely local industry”

to Oregon. Id. at 1100; cf. Bacchus, 468 U.S. at 271,

104 S.Ct. 3049 (finding the effect of a tax exemption

“clearly discriminatory, in that it applies only to

locally produced beverages”). As the district court

explained, some of the fuels “most desirable from a

carbon intensity standpoint” are out-of-state biofuels.

Judgment, Am. Fuel & Petrochemical Mfrs. v.

O’Keeffe, No. 3:15-cv-00467-AA (D. Or. March 23,

2015), ECF No. 72. The Program thus does not favor

in-state biofuels over similar out-of-state biofuels,

which renders this case fully distinguishable from

West Lynn Creamery, Inc. v. Healy, 512 U.S. 186, 188,

114 S.Ct. 2205, 129 L.Ed.2d 157 (1994), upon which

the dissent relies. In that case, a Massachusetts tax on

in-state and out-of-state milk dealers was used to fund

a subsidy exclusively for in-state milk producers.

See 512 U.S. at 190–91, 114 S.Ct. 2205. Under the

structure of the Oregon Program, however, out-ofstate producers are able to—and do—generate credits

and thus share in the Program’s benefits. As the

district court noted, the Program “rewards all investment in innovative fuel production, irrespective of

where that innovation occurs.” See ODEQ 2016

Report. In contrast, the subsidies at issue in West

Lynn Creamery were distributed explicitly and

exclusively to in-state producers based on geography

alone. See 512 U.S. at 190–91, 196–97, 114 S.Ct. 2205.

Thus, the pleadings do not provide a plausible basis

from which to infer that the Program will shift market

shares to in-state biofuel producers, as opposed to

biofuel producers in general. See Exxon Corp., 437 U.S.

at 126, 98 S.Ct. 2207 (holding that a law did not

discriminate against out-of-state refiners because “instate independent dealers will have no competitive

advantage over out-of-state dealers”); Black Star

20a

Farms LLC v. Oliver, 600 F.3d 1225, 1231–32 (9th Cir.

2010). The fact that some burdens of Oregon’s program

“fall[ ] on some interstate companies does not, by itself,

establish a claim of discrimination against interstate

commerce.” Exxon Corp., 437 U.S. at 126, 98 S.Ct.

2207.11

B. Extraterritorial Effect

The dormant Commerce Clause also prohibits a

state from regulating conduct that “takes place wholly

outside of the State’s borders.” Sam Francis Found. v.

Christies, Inc., 784 F.3d 1320, 1323 (9th Cir. 2015) (en

banc) (quoting Healy v. Beer Inst., 491 U.S. 324, 336,

109 S.Ct. 2491, 105 L.Ed.2d 275 (1989)). American

Fuel alleged that the Oregon program violates the

Commerce Clause and “principles of interstate federalism” by attempting to control “commerce occurring

wholly outside the boundaries” of the state. Healy, 491

U.S. at 336, 109 S.Ct. 2491. But, these claims are

squarely barred by Rocky Mountain. See 730 F.3d at

1101 (“Firms in any location may elect to respond to

the incentives provided by the Fuel Standard if they

wish to gain market share in California, but no firm

must meet a particular carbon intensity standard,

and no jurisdiction need adopt a particular regulatory

standard for its producers to gain access to

11

The fact that Oregon does not have a petroleum industry

that is burdened under the Program does not support American

Fuel’s discrimination claims. We have previously upheld, for

example, an Arizona regulation that could shift market share

away from large wineries even though the state had only one

large winery that would be burdened under the regulation. See

Black Star Farms, 600 F.3d at 1227–29. The regulations show

that the Program “‘regulates evenhandedly’ . . . without regard”

to a regulated party’s origin. Clover Leaf Creamery Co., 449 U.S.

at 471–72, 101 S.Ct. 715.

21a

California.”). Like the LCFS, the Program expressly

applies only to fuels sold in, imported to, or exported

from Oregon. Or. Admin. R. 340-253-0100(1).

American Fuel contends that its claim based on

principles of interstate federalism raises issues not

considered in Rocky Mountain. However, as the district court correctly noted, “irrespective of its constitutional basis, any such claim is necessarily contingent

upon a finding that the Oregon program regulates

and attempts to control conduct that occurs in other

states.” See Rocky Mountain Farmers Union, 2014

WL 7004725, at *13–14 (denying leave to amend on

remand to add claim alleging that the LCFS was

unconstitutional under principles of interstate federalism because claim was based on same premise as an

extraterritorial legislation claim). Because the Program does not legislate extraterritorially, American

Fuel’s claim fails no matter how its constitutional

claim is labelled.

C. Preemption

Finally, American Fuel alleges that the Oregon

program is preempted by § 211 of the CAA. That Act

recognizes that “air pollution control at its source is

the primary responsibility of States and local governments,” 42 U.S.C. § 7401(a)(3), but preempts state

regulation of a fuel or fuel component if the EPA

Administrator has declared regulation unnecessary:

Except as otherwise provided in subparagraph (B)

or (C), no State (or political subdivision thereof)

may prescribe or attempt to enforce, for purposes

of motor vehicle emission control, any control or

prohibition respecting any characteristic or component of a fuel or fuel additive in a motor vehicle

or motor vehicle engine—

22a

(i) if the Administrator has found that no control or prohibition of the characteristic or component of a fuel or fuel additive under paragraph (1) is necessary and has published his

finding in the Federal Register . . . .

42 U.S.C. § 7545(c)(4)(A).

American Fuel contends that the EPA has found

regulation of methane is unnecessary because it

excluded methane from the definition of volatile

organic compounds under § 211(k) of the CAA in light

of its low reactivity. See 40 C.F.R. pt. 80 (1994);

42 U.S.C. § 7545(k). The CAA, however, makes plain

that the administrator must find that “no control or

prohibition . . . under” § 211(c) is necessary in order to

effect preemption. The EPA’s decision not to regulate

methane under § 211(k) is not a finding that regulating methane’s contributions to greenhouse gas emissions is unnecessary, and thus is not preemptive under

§ 211(c)(4)(A)(i).

III. Conclusion

For the reasons above, we AFFIRM the judgment of

the district court.

N.R. SMITH, Circuit Judge, dissenting:

I cannot agree to dismiss American Fuel’s claim,1

alleging that the practical effect of Oregon’s Clean

1

I agree with the majority that Rocky Mountain Farmers

Union v. Corey, 730 F.3d 1070 (9th Cir. 2013), resolved many of

the issues presented in this case. Nonetheless, although bound by

our circuit precedent, I continue to believe that the incorporation

of location and distance data into the calculation of carbon

intensity values is facially discriminatory under the Supreme

Court’s Commerce Clause analysis. See Rocky Mountain Farmers

23a

Fuels Program (the “Oregon program”) impermissibly

favors in-state interests at the expense of out-of-state

interests.

I.

Where “a statute discriminates against out-of-state

entities . . . in its practical effect, it is unconstitutional

unless it ‘serves a legitimate local purpose, and this

purpose could not be served as well by available

nondiscriminatory means.’” Rocky Mountain Farmers

Union v. Corey, 730 F.3d 1070, 1087 (9th Cir. 2013)

(quoting Maine v. Taylor, 477 U.S. 131, 138, 106 S.Ct.

2440, 91 L.Ed.2d 110 (1986)). In Rocky Mountain, we

followed the Supreme Court’s decision in West Lynn

Creamery, Inc. v. Healy, 512 U.S. 186, 114 S.Ct. 2205,

129 L.Ed.2d 157 (1994). See 730 F.3d at 1098–1100.

There the Supreme Court struck down as “clearly

unconstitutional” a facially neutral state pricing order

that imposed a tax on all milk produced for consumption in Massachusetts while also providing a subsidy

“exclusively to Massachusetts dairy farmers” that

“entirely (indeed more than) offset” the tax for in-state

producers. W. Lynn Creamery, 512 U.S. at 194, 114

S.Ct. 2205. By increasing the competitiveness of instate industry at the expense of out-of-state industry,

Massachusetts “neutraliz[ed] advantages belonging to

the place of origin.” Id. at 196, 114 S.Ct. 2205 (quoting

Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511, 527, 55

S.Ct. 497, 79 L.Ed. 1032 (1935)). The Supreme Court

explained that

[n]ondiscriminatory measures, like the evenhanded tax at issue here, are generally upheld, in

Union v. Corey, 740 F.3d 507, 515–16 (9th Cir. 2014) (M. Smith

dissenting from denial of rehearing en banc).

24a

spite of any adverse effects on interstate commerce, in part because the existence of major instate interests adversely affected is a powerful

safeguard against legislative abuse. . . . However,

when a nondiscriminatory tax is coupled with a

subsidy to one of the groups hurt by the tax, a

State’s political processes can no longer be relied

upon to prevent legislative abuse, because one of

the in-state interests which would otherwise lobby

against the tax has been mollified by the subsidy.

Id. at 200, 114 S.Ct. 2205 (original alterations and

internal quotation marks omitted).

In Rocky Mountain, we applied the West Lynn

Creamery Rule in evaluating the constitutionality of

California’s clean fuels program (which the Oregon

law models). 730 F.3d at 1098–1100. There we determined that the California law burdened more in-state

industry than it benefitted. See id. at 1099. Importantly, that conclusion was necessary to our decision

that California’s law did not violate the principles in

West Lynn Creamery. See id. at 1098–1100.

In its opinion the majority fails to grapple with the

Oregon program’s West Lynn Creamery problem. That

decision causes them to err as is shown below.

II.

Again, to state a plausible claim for discrimination,

American Fuel must allege that (A) the Oregon

program discriminates against out-of-state interests

in its practical effect, and (B) Oregon’s legitimate

interest in reducing global warming could be

addressed by non-discriminatory means.

Further, as an initial matter in evaluating American Fuel’s claim, this case is distinguished from Rocky

25a

Mountain because it comes before us on a motion

to dismiss, not summary judgment. The evidentiary

record has not been developed in discovery. Thus,

we must take all factual allegations and reasonable

inferences therefrom in the light most favorable to

American Fuel. See Adams v. U.S. Forest Serv., 671

F.3d 1138, 1142–43 (9th Cir. 2012).

A.

American Fuel’s pleadings plausibly allege that

Oregon’s program discriminates in its practical effect.

First, Oregon’s program assigns a carbon intensity2

to all transportation fuels produced for in-state

consumption. The program then sets a maximum

carbon intensity value. Fuels with a carbon intensity

level above the maximum allowed carbon intensity

value generate deficits and fuels with intensity levels

below this value generate credits. Oregon also requires

producers with deficits to off-set those deficits by

purchasing credits from competing fuel producers that

have generated credits under the law.

As American Fuel alleges, the discrimination arises

from Oregon’s decision to draw the maximum allowed

carbon intensity value in such a manner that all instate fuel producers generate credits and only out-ofstate fuel producers generate deficits. As a practical

matter, this not only exempts in-state entities from

any burden under the law (to remedy deficits by purchasing credits from competitors), but it also affords

them an additional subsidy in the form of valuable

carbon credits. By contrast, out-of-state regulated

2

The Carbon intensity value is based on a formula aimed at

assessing the carbon footprint of each fuel from production

through its ultimate consumption.

26a

entities, including American Fuel, generate deficits

and experience the full impact of the law.3

Thus, like the tax and subsidy in West Lynn

Creamery, Oregon’s program discriminates in its

practical effect. See 512 U.S. at 200, 114 S.Ct. 2205.

Out-of-state entities bear the full brunt of the law’s

burden, even though all fuel producers (including instate entities) contribute to greenhouse gas emissions

(and consequently global warming). At the same time,

in-state entities not only avoid the burden of the law,

they also receive a subsidy from the out-of-state

entities in the sale of their valuable credits. Thus,

American Fuel plausibly alleges that the Oregon

program discriminates in its practical effect.

B.

It is also plausible that there are nondiscriminatory

means of advancing Oregon’s legitimate interest in

combating global warming. See Rocky Mountain, 730

F.3d at 1087, 1106 (identifying legitimate state interests in addressing global warming). To state a plausible claim, it is unnecessary to identify every “available nondiscriminatory means” of accomplishing the

goal of reducing greenhouse gases. See id. at 1087

(quoting Taylor, 477 U.S. at 138, 106 S.Ct. 2440).

However, it is easy to suggest one plausible example.

Oregon could simply adopt a per unit tax on carbon

intensity. Such a tax would discourage use of carbon

intense fuels without artificially shielding in-state

3

As the majority is quick to note, there are some out-of-state

entities that also generate credits. But the Commerce Clause

problem emphasized in the West Lynn Creamery analysis was the

uniform absence of an in-state burden—not the presence of a

uniform burden on out-of-state interests. See 512 U.S. at 200, 114

S.Ct. 2205.

27a

interests from any responsibility for their contributions to greenhouse gas emissions. The availability of

nondiscriminatory means of addressing global warming plausibly establishes that the discriminatory effect

of Oregon’s law violates the Commerce Clause.

III.

There is no doubt American Fuel alleges a plausible

claim. Taken together, the discriminatory practical

effect of Oregon’s program and the availability of

nondiscriminatory alternatives plainly state a claim

under the Commerce Clause that ought to survive a

motion to dismiss.

28a

APPENDIX B

UNITED STATES DISTRICT COURT

D. OREGON

————

Case No. 3:15–cv–00467–AA

————

AMERICAN FUEL & PETROCHEMICAL MANUFACTURERS,

AMERICAN TRUCKING ASSOCIATIONS, INC.,

A TRADE ASSOCIATION, AND CONSUMER ENERGY

ALLIANCE, A TRADE ASSOCIATION,

Plaintiffs,

v.

JANE O’KEEFFE, ED ARMSTRONG, MORGAN RIDER,

COLLEEN JOHNSON, AND MELINDA EDEN, IN THEIR

OFFICIAL CAPACITIES AS MEMBERS OF THE OREGON

ENVIRONMENTAL QUALITY COMMISSION; DICK

PEDERSON, JONI HAMMOND, WENDY WILES, DAVID

COLLIER, JEFFERY STOCUM, CORY-ANN WIND, LYDIA

EMER, LEAH FELDON, GREG ALDRICH, AND SUE

LANGSTON, IN THEIR OFFICIAL CAPACITIES AS OFFICERS

AND EMPLOYEES OF THE OREGON DEPARTMENT OF

ENVIRONMENTAL QUALITY; ELLEN ROSENBLUM, IN HER

OFFICIAL CAPACITY AS ATTORNEY GENERAL OF THE

STATE OF OREGON; AND KATE BROWN, IN HER OFFICIAL

CAPACITY AS GOVERNOR OF THE STATE OF OREGON,

Defendants,

v.

CALIFORNIA AIR RESOURCES BOARD,

STATE OF WASHINGTON, OREGON ENVIRONMENTAL

COUNCIL, INC., CLIMATE SOLUTIONS,

NATURAL RESOURCES DEFENSE COUNCIL,

ENVIRONMENTAL DEFENSE FUND, AND SIERRA CLUB,

Defendant-Intervenors.

————

29a

Signed Sept. 23, 2015

————

OPINION AND ORDER

AIKEN, Chief Judge:

Defendants Jane O’Keeffe, Ed Armstrong, Morgan

Rider, Colleen Johnson, Melinda Eden, Dick Pederson,

Joni Hammond, Wendy Wiles, David Collier, Jeffrey

Stocum, Cory–Ann Wind, Lydia Emer, Leah Feldon,

Greg Aldrich, Sue Langton [sic], Ellen Rosenblum, and

Kate Brown move to dismiss plaintiffs American Fuel

and Petrochemical Manufacturers, American Trucking

Associations, Inc., and Consumer Energy Alliance’s

claims pursuant to Fed.R.Civ.P. 12(b)(1) and

Fed.R.Civ.P. 12(b)(6). Defendant-intervenors California

Air Resources Board and the State of Washington

(collectively “State Intervenors”) separately move to

dismiss plaintiffs’ complaint with prejudice. Defendantintervenors Oregon Environmental Council, Inc.,

Climate Solutions, Natural Resources Defense Council,

Environmental Defense Fund, and Sierra Club (collectively “Conservation Intervenors”) also move for

judgment on the pleadings under Fed.R.Civ.P. 12(c).1

For the reasons set forth below, defendants’ and

defendant-intervenors’ motions are granted, and this

case is dismissed.

BACKGROUND

In 2007, the Oregon legislature found that climate

change seriously threatened Oregon’s economy, environment, and public health. Or.Rev.Stat. § 468A.200.

1

Defendant-intervenors’ arguments in favor of dismissal are

analogous to those asserted by defendants. Except where otherwise indicated, the Court will address defendant-intervenors’ and

defendants’ motions together.

30a

These threats included “[r]educed snowpack, changes

in the timing of stream flows, extreme or unusual

weather events, rising sea levels, increased occurrences of vector-borne diseases and impacts on forest

health.” Id. Such environmental damage would “have

detrimental effects on many of [Oregon’s] largest

industries, including agriculture, wine making, tourism,

skiing, recreational and commercial fishing, forestry

and hydropower generation.” Id. The Oregon legislature identified a need to assess and monitor the

current level of greenhouse gas emissions (“GHG”) in

Oregon, “and to take necessary action to begin reducing greenhouse gas emissions in order to prevent

disruption of [Oregon’s] economy and quality, [sic] of

life and to meet [Oregon’s] responsibility to reduce the

impacts and the pace of global warming.” Id.

In 2009, the state resolved to lower GHG emissions

from transportation fuels, which, at 30%, account for

the largest single market share. Compl. ¶ 30; Or.

Admin. R. 340–253–0000(1). Specifically, via House

Bill 2186, the Oregon legislature instructed the

Oregon Environmental Quality Commission (“EQC”)

to adopt rules to decrease lifecycle GHG emissions

from transportation fuels, based on their carbon

intensities, that are produced in or imported to Oregon

by 10% over a 10–year period (“Oregon Program”).2

Compl. ¶¶ 30–31; Or. Admin. R. 340–253–0000(2)–(3).

2

Lifecycle GHG emissions are the “aggregated quantity of

[GHG] emissions, including direct emissions and significant

indirect emissions, such as significant emissions from changes in

land use associated with the fuels; [m]easured over the full fuel

lifecycle, including all stages of fuel production, from feedstock

generation or extraction, production, distribution, and combustion of the fuel by the consumer; and [s]tated in terms of mass

values for all [GHGs] as adjusted to C02e to account for the

31a

In 2010, the Department of Environmental Quality

(“DEQ”) convened an advisory committee to help design

a program consistent with House Bill 2186. Compl.

¶¶ 30–31. In January 2011, the DEQ published a final

report outlining the advisory committee’s process and

recommendations. Id. at ¶ 33. In December 2012, the

EQC adopted Phase 1 rules for the Oregon Program.

Id. at ¶ 34. Phase 1 began on January 1, 2013, when

the state began requiring regulated parties—i.e. “[a]ll

persons that produce in Oregon or import into Oregon

any regulated fuel”3—to register for the Oregon Program

and record/report the volumes and carbon intensities

of their transportation fuels. Or. Admin. R. 340–253–

0100(1), 340–253–0200, 340–253–0500, 340–253–

0600–50.

In January 2015, after the DEQ convened a second

advisory committee, the EQC adopted Phase 2 rules.

Compl. ¶¶ 35, 37. These rules require regulated

parties to meet the annual clean fuel standards. Or.

Admin. R. 340–253–0100–250, 340–253–0400, 340–

253–8010–20. The carbon intensity of a fuel is based

on OR–GREET, a lifecycle emissions model developed

by the Argonne National Laboratory and customized

for Oregon. Or. Admin. R. 340–253–0040(44). The

Oregon Program regulations include lookup tables

relative global warming potential of each gas.” Or. Admin. R.

340–253–0040(37). “Carbon intensity,” in turn, is “the amount of

lifecycle [GHG] emissions per unit of energy of fuel expressed in

grams of carbon dioxide equivalent per megajoule (gC02e per

MJ).” Or. Admin. R. 340–253–0040(9).

3

The Oregon Program contrasts “regulated fuel,” which is

essentially any traditional fuel such as gasoline or diesel, with

“clean fuel,” which is defined as any “transportation fuel with a

carbon intensity value lower than the clean fuel standard for

gasoline or diesel fuel and their substitutes.” Or. Admin. R. 340–

253–0200.

32a

that list the carbon intensities of a variety of fuels.4 Or.

Admin. R. 340–253–8030–40.

Beginning in 2016,5 regulated parties will need to

hold credits equal to or greater than their deficits, on

an annual aggregate basis, to demonstrate their

compliance with the Oregon Program. Or. Admin. R.

340–253–8010–20. A clean fuel credit is generated

when fuel is produced, imported, dispensed, or used in

Oregon and the carbon intensity value is lower than

the clean fuel standard for that year. Or. Admin. R.

340–253–1000(5). Conversely, a clean fuel deficit is

generated when fuel is produced, imported, dispensed,

or used in Oregon and the carbon intensity value

exceeds the clean fuel standard for that year. Or.

Admin. R. 340–253–1000(6). Credits can be bought

and sold, banked for the future, or used by a fuel

importer or producer to offset a deficit created by the

importation or production of other fuels. Or. Admin. R.

340–253–1050. This structure allows regulated parties

flexibility in complying with the Oregon Program, as

4

These tables, in part, represent default values that “incorporate . . . average [carbon intensities] for producers within [a]

region that use the same mechanical methods and thermalenergy source and produce the same co-product.” Rocky Mountain

Farmers Union v. Corey, 730 F.3d 1070, 1093 (9th Cir.2013), reh’g

denied en banc, 740 F.3d 507 (9th Cir.), cert. denied, ––– U.S. ––,

134 S.Ct. 2875, 189 L.Ed.2d 835 (2014), ––– U.S. –––, 134 S.Ct.

2884, 189 L.Ed.2d 835 (2014). Other rows represent individualized carbon intensity values for particular fuel pathways. See,

e.g., Or. Admin. R. 340–253–8030 (Table 3). Regulated parties are

instructed to use the carbon intensity value for the fuel that “best

matches the description in the fuel pathway” in the lookup tables.

Or. Admin. R. 340–253–0400(2).

5

In March 2015, Governor Brown signed Senate Bill 324,

which removed the sunset date for the Oregon Program and

allowed DEQ to continue its implementation efforts. Compl. ¶ 38.

33a

no regulated party is required to sell any particular

fuel or blend of fuels with a certain carbon intensity or

origin.

On March 23, 2015, plaintiffs filed a complaint in

this Court alleging that the Oregon Program: (1) discriminates against out-of-state commerce in violation

of the Commerce Clause; (2) regulates extraterritorial

activity in violation of the Commerce Clause and principles of interstate federalism; (3) is expressly preempted

by section 211(c) of the Clean Air Act (“CAA”) and

the Environmental Protection Agency’s (“EPA”) [sic]

Reformulated Gasoline Rule (“RFGR”); and (4) is

conflict preempted by section 211(o ) of the CAA, which

contains the Renewable Fuel Standard (“RFS”) as

amended by the Energy Independence and Security

Act (“EISA”).6 In June 2015, defendants and defendantintervenors filed the present motions to dismiss.7

6

The Oregon Program is comparable to California’s Low

Carbon Fuel Standard (“LCFS”). Compare Cal.Code Regs. tit. 17,

§§ 95480–90, with Or. Admin. R. 340–253–0000–8080. In fact, it

is undisputed that the Oregon Program was modeled after the

LCFS and is analogous thereto in all relevant respects. Pls.’ Resp.

to Mots. 3–5, 25; see also State Intervenors’ Mot. Dismiss 2–4

(detailing the similarities between each program). The LCFS was

recently challenged by several farming and fuel associations,

including plaintiffs, on many of the same grounds. See generally

Rocky Mountain, 730 F.3d 1070; Rocky Mountain Farmers Union

v. Goldstene (‘‘Rocky Mountain II’’), 2014 WL 7004725 (E.D.Cal.

Dec. 11, 2014); Am. Fuels & Petrochem. Mfrs. Ass’n v. Corey, 2015

WL 4872639 (E.D.Cal. Aug. 13, 2015).

7

State Intervenors also request judicial notice of certain

documents. State Intervenors’ First Req. Judicial Notice Exs.

AG [sic]; State Intervenors’ Second Req. Judicial Notice Exs. H–

L. Additionally, defendants attach materials to their opening

and reply briefs. Defs.’ Mot. Dismiss Appx.; Defs.’ Reply to

Mot. Dismiss Exs. 1–7. Plaintiffs do not object to and, in some

instances, rely on these documents. Because they are part of the

34a

STANDARDS

Where the court lacks subject-matter jurisdiction,

the action must be dismissed. Fed.R.Civ.P. 12(b)(1).

The party seeking to invoke the subject-matter jurisdiction of the court bears the burden of establishing

that such jurisdiction exists. Stock W., Inc. v.

Confederated Tribes of the Colville Reservation, 873

F.2d 1221, 1225 (9th Cir.1989). The court may hear

evidence regarding subject-matter jurisdiction and

resolve factual disputes where necessary: “no presumptive truthfulness attaches to plaintiff’s allegations,

and the existence of disputed material facts will not

preclude the [court] from evaluating for itself the merits

of jurisdictional claims.” Kingman Reef Atoll Invs., LLC

v. United States, 541 F.3d 1189, 1195 (9th Cir.2008).

Where the plaintiff “fails to state a claim upon which

relief can be granted,” the court must dismiss the

action. Fed.R.Civ.P. 12(b)(6). To survive a motion to

dismiss, the complaint must allege “enough facts to

state a claim to relief that is plausible on its face.” Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127

S.Ct. 1955, 167 L.Ed.2d 929 (2007). For the purposes

of a Fed.R.Civ.P. 12(b)(6) motion, the complaint is

liberally construed in favor of the plaintiff and its

allegations are taken as true. Rosen v. Walters, 719

F.2d 1422, 1424 (9th Cir.1983). Bare assertions that

amount to nothing more than a “formulaic recitation

of the elements” of a claim “are conclusory and not

entitled to be assumed true.” Ashcroft v. Iqbal,

public record and/or incorporated by reference into the complaint,

the Court considers these materials, to the extent relevant, in

evaluating the present motions. United States v. Ritchie, 342 F.3d

903, 908 (9th Cir.2003) (citations omitted); Santa Monica Food

Not Bombs v. City of Santa Monica, 450 F.3d 1022, 1025 n. 2 (9th

Cir.2006) (citations omitted).

35a

556 U.S. 662, 680–81, 129 S.Ct. 1937, 173 L.Ed.2d

868 (2009). Rather, to state a plausible claim for relief,

the complaint “must contain sufficient allegations of

underlying facts” to support its legal conclusions.

Starr v. Baca, 652 F.3d 1202, 1216, reh’g en banc

denied, 659 F.3d 850 (9th Cir.2011).

Judgment on the pleadings is proper where “the

moving party clearly establishes on the face of the

pleadings that no material issue of fact remains to be

resolved and that it is entitled to judgment as a matter

of law.” Hal Roach Studios, Inc. v. Richard Feiner &

Co., 896 F.2d 1542, 1550 (9th Cir.1990); Fed.R.Civ.P.

12(c). “Rule 12(c) is functionally identical to Rule

12(b)(6) and [the] same standard of review applies to

motions brought under either rule.” Cafasso, U.S. ex

rel. v. General Dynamics C4 Sys., Inc., 637 F.3d 1047,

1054 n. 4 (9th Cir.2011) (citation and internal quotations omitted).

DISCUSSION

The central issue to be decided in this case is

whether the Oregon Program violates federal law.

Defendants argue that dismissal of plaintiffs’

Commerce Clause claims is required because they are

precluded by Rocky Mountain, fail at the pleadings

level, and/or are not yet ripe. In addition, defendants

contend that plaintiffs cannot state an express

preemption claim because the EPA did not

affirmatively preclude state regulation of methane.

Defendants also assert that plaintiffs’ conflict

preemption claim fails because prudential standing is

lacking and the RFS and EISA are in harmony with

the Oregon Program.8

8

To the extent plaintiffs maintain that their allegations are

sufficient or plausible despite the actual text of the relevant stat-

36a

I. First Claim: Discrimination

Plaintiffs allege that the Oregon Program discriminates in purpose and effect, as well as facially, “by

attempting to regulate and control economic conduct

occurring outside the borders of Oregon, including the

extraction, production and distribution of transportation fuels.” Compl. ¶¶ 4, 107–19.

The Commerce Clause “has long been understood to

have a ‘negative’ aspect that denies the States the

power unjustifiably to discriminate against or burden

the interstate flow of articles of commerce.” Or. Waste

Sys., Inc. v. Dep’t of Envtl. Quality of State of Or.,

511 U.S. 93, 114 S.Ct. 1345, 128 L.Ed.2d 13 (1994)

(citation omitted). Known as the “dormant” Commerce

Clause, this aspect is not a complete negative, as “the

Framers’ distrust of economic Balkanization was

limited by their federalism favoring a degree of local

autonomy.” Dep’t of Revenue of Ky. v. Davis, 553 U.S.

328, 338, 128 S.Ct. 1801, 170 L.Ed.2d 685 (2008)

(citations omitted). Accordingly, a “state may, if its

citizens choose, serve as a laboratory; and try novel

social and economic experiments without risk to the

rest of the country.” Rocky Mountain, 730 F.3d at 1087

(citation and internal quotations omitted).

“The modern law of what has come to be called the

dormant Commerce Clause is driven by concern about

economic protectionism—that is, regulatory measures

designed to benefit in-state economic interests by

burdening out-of-state competitors.” Davis, 553 U.S.

at 337–38, 128 S.Ct. 1801 (citation and internal

quotations omitted). Economic protectionism, or disutes and regulations, or certain contradictory judicially noticeable

facts, their argument is without merit. Shwarz v. United States,

234 F.3d 428, 435 (9th Cir.2000).

37a

crimination, “simply means differential treatment of

in-state and out-of-state economic interests that benefits the former and burdens the latter.” Or. Waste Sys.,

511 U.S. at 99, 114 S.Ct. 1345. If a statute discriminates against out-of-state entities on its face, in its

purpose, or in its practical effect, strict scrutiny

applies: the law is unconstitutional unless it “serves a

legitimate local purpose, and this purpose could not be

served as well by available nondiscriminatory means.”

Maine v. Taylor, 477 U.S. 131, 138, 106 S.Ct. 2440, 91

L.Ed.2d 110 (1986) (citation and internal quotations

omitted). Absent discrimination, a law will be upheld

“unless the burden imposed on [interstate] commerce

is clearly excessive in relation to the putative local

benefits.” Pike v. Bruce Church, Inc., 397 U.S. 137,

142, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970).9 “The party

challenging the statute bears the burden of showing

discrimination.” Black Star Farms, LLC v. Oliver, 600

F.3d 1225, 1230 (9th Cir.2010).

The Court notes, at the outset, that plaintiffs’

discrimination claim is largely barred by on-point

precedent: the Ninth Circuit held that the LCFS did

not facially discriminate against out-of-state ethanol

or petroleum, and did not discriminate in purpose or

effect against out-of-state petroleum. Rocky Mountain,

730 F.3d at 1107. The only issue related to discrimination that falls outside Rocky Mountain is whether the

Oregon Program discriminates in purpose or effect

9

Plaintiffs neither argue nor allege that the Oregon Program

fails under the balancing test articulated in Pike. See generally

Compl.; Pls.’ Resp. to Mots.; see also Rocky Mountain II, 2014

WL 7004725 at *15 n. 16 (plaintiffs “abandon[ed] their Pike challenges to both the crude oil and ethanol provisions of the LCFS”).

Therefore, the sole issue is whether the Oregon Program is

discriminatory.

38a

against out-of-state ethanol. Rocky Mountain II, 2014

WL 7004725 at *14–15 (citations omitted). While

plaintiffs concede that Rocky Mountain “controls” certain

issues, they nonetheless disagree and categorize its

holdings as largely non-binding because it “involved a

different state’s officials, a different statute and regulations, a different record, and different statements.”

Pls.’ Resp. to Mots. 2, 11, 18–19. Plaintiffs further seek

to preserve their arguments for appeal, such that the

Court will address all aspects of their discrimination

claim.

A. Facial Discrimination

Plaintiff’s assert that the Oregon Program is facially

invalid because it discriminates against petroleum—

by “assign[ing] petroleum a higher carbon intensity

than ethanol and other Oregon biofuels”—and Midwest

ethanol—because “[t]he lookup tables consistently

give higher scores to ethanol produced in the Midwest

than to ethanol produced using the same process in

Oregon.” Pls.’ Resp. to Mots. 16–18 (citing Compl.

¶¶ 55–59, 66–80).

Initially, plaintiffs do not meaningfully address how

petroleum and ethanol are similarly situated or cite to

any well-pleaded factual allegations to that effect. See

generally Compl.; Pls.’ Resp. to Mots.; see also General

Motors Corp. v. Tracy, 519 U.S. 278, 298–99, 310, 117

S.Ct. 811, 136 L.Ed.2d 761 (1997) (when the alleged

discrimination involves “entities [that] provide different products, as here, there is a threshold question

whether the companies are indeed similarly situated

for constitutional purposes”); Rocky Mountain, 730

F.3d at 1084–94 (analyzing ethanol and petroleum

separately because “[c]rude oil presents different

climate challenges from ethanol and other biofuels . . .

[if a state] is to successfully [counter] a trend towards

39a

increased GHG output and rising world temperatures,

it cannot ignore the real factors behind GHG emissions”); State Intervenors’ Reply to Mot. Dismiss 8–9

(“[i]n the transportation fuel context, courts have traditionally considered ethanol to compete with ethanol

and petroleum to compete with petroleum”) (collecting

cases).10 Thus, to the extent they phrase it broadly to

encompass both fuels, plaintiffs’ claim fails at the

pleadings level.

In any event, the fundamental premise of plaintiffs’

claim is that the only fuels benefitting from the Oregon

Program originate in Oregon. Plaintiffs therefore

ignore significant segments of the market and instead

ask this Court to assume that the pertinent comparison consists of Oregon biofuels,11 on the one hand, and

10

Although defendants and State Intervenors raise this issue

as a basis for dismissal, plaintiffs respond solely by pointing to,

and misquoting, the complaint’s allegations. Pls.’ Resp. to Mots.

17 n. 9 (citing Compl. ¶ 58). This is especially problematic given

that compliance with the Oregon Program can be achieved exclusively through the purchase of credits, such that nothing precludes

plaintiffs from continuing to produce and import diesel/petroleum

in lieu of fuels with lower carbon intensities. See Defs.’ Reply to

Mot. Dismiss Ex. 2, at 8 (“the low carbon fuel standards would

not mandate the use of any specific fuel”); Defs.’ Reply to Mot.

Dismiss Ex. 3, at 1 (“[t]o meet the [annual clean fuel] standards,

regulated parties would select the strategy that works best for

them [which could mean merely] purchasing clean fuel credits

from providers of clean fuels”).

11

Biofuels include ethanol and biodiesel; nevertheless, the

Court’s analysis focuses exclusively on ethanol, as plaintiffs fail

to allege any facts concerning biodiesel produced either inside or

outside of Oregon, beyond observing that Oregon biodiesel

“already meet[s] the proposed average annual carbon intensity.”

Compl. ¶ 58; see also Or. Admin. R. 340–253–8040 (Table 4) (all

biodiesels have average carbon intensities below the annual fuel

standard).

40a

out-of-state petroleum and Midwest ethanol, on the

other. See, e.g., Pls.’ Resp. to Mots. 12. The Ninth

Circuit, however, expressly rejected this attempt at

“selective comparison, which excludes relevant [competing] fuel pathways” and held that discrimination

claims, whether premised on ethanol or petroleum,

must be viewed “in context of the full market.” Rocky

Mountain, 730 F.3d at 1088–90, 1099.

Like the LCFS, the Oregon Program is not facially

discriminatory because it distinguishes among fuels

based on lifecycle GHG emissions, not origin or destination. In fact, the Oregon Program assigns twelve

out-of-state ethanol pathways carbon intensities lower

than the value plaintiffs’ allege confers discriminatory

benefits. Id. at 1089–96; Or. Admin. R. 340–253–8030

(Table 3); see also Compl. ¶ 70 (recognizing that an

ethanol produced in California obtains the same benefits under the Oregon Program as those produced in

Oregon). These twelve lower pathways represent biofuels

from outside of Oregon; seven are expressly identified

as from California and Brazil, and the remaining five

correspond to ethanols from the Midwest. Or. Admin.

R. 340–253–8030 (Table 3); see also Rocky Mountain,

730 F.3d at 1084, 1090 (“the lowest ethanol carbon

intensity values, providing the most beneficial market

position, have been for pathways from the Midwest

and Brazil”). As such, the Oregon Program does not

facially discriminate against out-of-state ethanol.

Assuming that biofuels and petroleum compete in

the same market, the fact that the Oregon Program

assigns lower carbon-intensity values to in-state and

out-of-state biofuels than to petroleum is not indicative

of discrimination. Petroleum’s higher carbon intensity

values exist for a legitimate, nondiscriminatory reason:

41a

[c]orn and sugarcane absorb carbon dioxide as

they grow, offsetting emissions released when

ethanol is burned. By contrast, the carbon in

crude oil makes a one-way trip from the Earth’s

crust to the atmosphere. For crude oil and its

derivatives, emissions from combustion are largely

fixed, but emissions from production vary significantly. As older, easily accessible sources of crude

are exhausted, they are replaced by newer sources

that require more energy to extract and refine,

yielding a higher carbon intensity than conventional crude oil. As extraction becomes more

difficult, emissions from crude oil will only increase,

but [the state] expects that fuels with carbon

intensity values fifty to eighty percent lower than

gasoline will be needed to meet its emissionsreduction targets. No matter how efficiently crude

oil is extracted and refined, it cannot supply this

level of reduction. To meet [the state’s] goals, the

development and use of alternative fuels must be

encouraged.

Rocky Mountain, 730 F.3d at 1084–85.

Moreover, it is undisputed that Oregon does not

produce any petroleum in-state. Pls.’ Resp. to Mots.

17–18 (citing Compl. ¶¶ 57–58); see also Exxon Corp.

v. Governor of Md., 437 U.S. 117, 125, 98 S.Ct. 2207,

57 L.Ed.2d 91, reh’g denied, 439 U.S. 884, 99 S.Ct. 232,

233, 58 L.Ed.2d 200 (1978) (because the state’s “entire

gasoline supply flows in interstate commerce [as] there

are no local producers or refiners, such claims of

disparate treatment between interstate and local commerce would be meritless”); see also Rocky Mountain,

730 F.3d at 1089 (“a regulation is not facially

discriminatory simply because it affects in-state

and out-of-state interests unequally”). Under Rocky

42a

Mountain and Exxon Corp., facial discrimination against

out-of-state petroleum would not transpire even if it

were ultimately displaced by biofuels in, [sic] the Oregon

market because “successfully promot[ing] low-carbon

intensity fuels” requires the consideration of “factors

[that] bear on the reality of GHG emissions,” including

“location, but only to the extent that location affects

the actual GHG emissions attributable to a default

pathway.” Rocky Mountain, 730 F.3d at 1089–93.

Finally, the cases plaintiffs rely on are distinguishable. See Pls.’ Resp. to Mots. 16–17 (citing Bacchus

Imps., Ltd. v. Dias, 468 U.S. 263, 104 S.Ct. 3049, 82

L.Ed.2d 200 (1984); Hunt v. Wash. State Apple Adver.

Comm’n, 432 U.S. 333, 97 S.Ct. 2434, 53 L.Ed.2d 383

(1977); New Energy Co. of Ind. v. Limbach, 486 U.S.

269, 108 S.Ct. 1803, 100 L.Ed.2d 302 (1988)). Two of

these cases focused primarily on non-facial discrimination. See, e.g., Bacchus, 468 U.S. at 268–73, 104 S.Ct.

3049 (observing “that the tax exemption here at issue

seems clearly to discriminate on its face against interstate commerce” but ultimately basing its ruling on

the statute’s purpose and effect); Hunt, 432 U.S. at

350–52, 97 S.Ct. 2434 (describing the challenged

statute’s facial neutrality and instead striking it down

due to its discriminatory effect). Regardless, the law

invalidated in Bacchus limited the state’s liquor excise

tax exemption to two products manufactured exclusively in-state. Bacchus, 468 U.S. at 265–66, 104 S.Ct.

3049. In contrast, under the Oregon Program, both instate and out-of-state products can earn, and have

earned, lower carbon intensity values, and regulated

parties are not required to import or manufacture any

specific fuel in order to achieve compliance. See Rocky

Mountain, 730 F.3d at 1100 (distinguishing Bacchus

in relation to the plaintiffs’ petroleum- based discriminatory purpose claim).

43a

Hunt and New Energy are similarly distinct. Plaintiffs

cite to these cases for the proposition that an otherwiseunconstitutional statute is not saved because it favors

certain out-of-state products in addition to in-state

products. Pls.’ Resp. to Mots. 16. Unlike the Oregon

Program, the state laws challenged in Hunt and New

Energy were not the most beneficial towards out-ofstate products. Hunt, 432 U.S. at 350–52, 97 S.Ct.

2434; New Energy, 486 U.S. at 271–75, 108 S.Ct. 1803;

see also Rocky Mountain, 730 F.3d at 1092 (distinguishing Hunt in relation to the plaintiffs’ ethanolbased facial discrimination claim). Further, unlike the

plaintiffs in Hunt, plaintiffs here identify no competitive and economic advantages they earned and that

the Oregon Program eliminates. Indeed, on its face,

the Oregon Program rewards all investment in

innovative fuel production, irrespective of where

that innovation occurs. Defendants’ and defendantintervenors’ motions are granted as to plaintiffs’ facial

discrimination claim.

B. Discriminatory Purpose

Plaintiffs contend that the Oregon Program “was

enacted to [favor] Oregon’s ‘home-grown’ biofuels

industry against the petroleum and ethanol industries

of other states.” Pls.’ Resp. to Mots. 8 (citing Compl.

¶¶ 71–84). Plaintiffs cite to statements made by state

lawmakers, as well as DEQ committee members and

officials, to support their assertion of discriminatory

purpose. Id. at 8–11.

Plaintiffs’ claim fails for three reasons. First, plaintiffs ignore the actual stated purpose of the Oregon

Program, which is to “reduce Oregon’s contribution to

the global levels of [GHG] emissions and the impacts

of those emissions in Oregon” by “reduc[ing] the

amount of lifecycle [GHG] emissions per unit of energy

44a

by a minimum of 10 percent below 2010 levels over a

10–year period.” Or. Admin. R. 340–253–0000(1)–(3);

see also Rocky Mountain, 730 F.3d at 1098 (court “will

assume that the objectives articulated by the legislature are actual purposes of the statute, unless an

examination of the circumstances forces [it] to conclude that they could not have been a goal of the

legislation”) (citation and internal quotations omitted);

Perry v. Commerce Loan Co., 383 U.S. 392, 400, 86

S.Ct. 852, 15 L.Ed.2d 827 (1966) (“[t]here is, of course,

no more persuasive evidence of the purpose of a statute than the words by which the legislature undertook

to give expression to its wishes”). Plaintiffs also ignore

that the metric by which GHG emissions are measured

applies evenhandedly; the dispositive inquiry is a

fuel’s carbon intensity, which correlates to the fuel’s

contribution to climate change, not its origin. Rocky

Mountain, 730 F.3d at 1089–90. In other words, the

purpose and design of the Oregon Program are

nondiscriminatory on their face.

Second, the comments plaintiffs rely on are provided

out of context. When read in their entirety, the documents in which these remarks appear reinforce that

the purpose of the Oregon Program is to reduce GHG

emissions. Compare Compl. ¶¶ 71–84 (excerpted comments), with Defs.’ Reply to Mot. Dismiss Exs. 1–7

(comments provided in context). In any event, the hope

of state officials that, in effectuating the legitimate

goal of lowering GHG emissions, the Oregon Program

benefits the local economy is insufficient to evince a

discriminatory purpose. See Valley Bank of Nev. v.

Plus. Sys., Inc., 914 F.2d 1186, 1193–96 (9th Cir.1990)

(regulation that “advances . . . legitimate state

interests” and “applies evenhandedly certainly passes

muster under the commerce clause”; the “predictable

concern” from state politicians for their own residents

45a

“does not rebut the evenhandedness of the legislation’s

plain language”).

Third, the plaintiffs in Rocky Mountain based their

discriminatory purpose claim on similar, isolated comments made by California lawmakers. Rocky Mountain,

730 F.3d at 1089–1101; see also Defs.’ Reply to Mot.

Dismiss 11–12 n. 4 (summarizing comparable statements made by California officials highlighting the

LCFS’ benefits to in-state industries) (citations omitted).

In holding that the LCFS did not have a discriminatory purpose, the Ninth Circuit explicitly acknowledged

the “few quotes from an expansive record” cited by

plaintiffs but nonetheless held that they “do not

plausibly relate to a discriminatory design and are

‘easily understood, in context, as economic defense of

a [regulation] genuinely proposed for environmental

reasons.’” Rocky Mountain, 730 F.3d at 1100 n. 13

(quoting Minnesota v. Clover Leaf Creamery, Co., 449

U.S. 456, 463 n. 7, 101 S.Ct. 715, 66 L.Ed.2d 659

(1981)). As discussed herein, any claim of a protectionist purpose is belied by the fact that the Oregon

Program provides advantages, in terms of lower carbon

intensity values, to numerous out-of-state fuels. See,

e.g., Or. Admin. R. 340–253–8030 (Table 3). Defendants’

and defendant-intervenors’ motions are granted as to

plaintiffs’ discriminatory purpose claim.

C. Discriminatory Effect

Plaintiffs allege that the Oregon Program creates a

“‘commercial disadvantage’ for petroleum and ethanol

from outside Oregon [by] requir[ing] regulated parties

to comply with the standard for carbon intensity, and

[assigning] lower carbon-intensity values to Oregon

ethanol and other biofuels than to petroleum, and

lower carbon-intensity values to Oregon ethanol than

to identical Midwest ethanol.” Pls.’ Resp. to Mots. 13

46a

(citing Compl. ¶¶ 55–57 and quoting New Energy, 486

U.S. at 274, 108 S.Ct. 1803).12

As a preliminary matter, plaintiffs’ [sic] base their

opposition on the wrong standard. Whether actual

evidence of differential treatment amongst in-state

and out-of-state interests exists, as opposed to a

commercial disadvantage, is the critical question. See

Black Star, 600 F.3d at 1232 (“[c]ourts examining a

‘practical effect’ challenge must be reluctant to

invalidate a state statutory scheme . . . simply because

it might turn out down the road to be at odds with our

constitutional prohibition against state laws that

discriminate against Interstate Commerce [especially]

where neither facial economic discrimination nor

improper purpose is an issue”); see also New Energy,

486 U.S. at 274–76, 108 S.Ct. 1803 (discrimination

was “patent” such that an analysis of the statute’s

discriminatory effect was not necessary). As a result,

to survive a motion to dismiss, a plaintiff must allege

more than the existence of a commercial disadvantage,

such as facts creating a reasonable inference that the

challenged law has differing effects on similarly

situated in-state and out-of-state entities.

Plaintiffs have not done so here; their only pleadings

pertaining to this subject conclude that the Oregon

12

In response to defendants’ ripeness argument, which the

Court does not find persuasive given the Oregon Program’s imminent start date and the hardship that would result to the parties

from withholding a decision, plaintiffs contend that “the question

of the Oregon Program’s effects is already clear”; yet, in other

portions of their brief, plaintiffs argue the effects are unknown

and that a “motion to dismiss in not an appropriate mechanism

to test whether a party will ultimately prove facts underlying

its well-pleaded claims.” Compare Pls.’ Resp. to Mots. 14, with id.

at 31, 34.

47a

Program “will have the intended discriminatory effect”

due to its discriminator design. Pls.’ Resp. to Mots. 13.

Yet the purported discriminatory design that plaintiffs

object to generally required regulated parties to reduce

the lifecycle GHG emissions of their fuels. See Compl.

¶¶ 55–58 (gasoline and “diesel importers would need

to replace existing sources [with fuels that have] lower

calculated carbon intensities or purchase credits from

other parties to meet their annual average carbon

intensity requirements”).

Additionally, the essential tenants of plaintiffs’

discriminatory effects claim are undermined by the

plain language of the Oregon Program and Ninth

Circuit precedent. The definition of a regulated party

does not depend on the origin of the fuel. Or. Admin.

R. 340–253–0100(1). Likewise, the Oregon Program

“does not base its treatment on a fuel’s origin but on

its carbon intensity.” Rocky Mountain, 730 F.3d at

1089. As addressed in section I(A), the Oregon Program

also does not grant preferential treatment to instate

[sic] biofuels over out-of-state petroleum and Midwest

ethanol. Whatever effects the Oregon Program may

ultimately have on Oregon’s biofuels market, there are

no plausible allegations demonstrating that out-ofstate producers will be commercially disadvantaged or

considerably burdened, as some of their biofuels are

the most desirable from a carbon intensity standpoint

and the Oregon Program mandates neither the use of

any particular fuel nor a specific carbon intensity or

origin. Defendants’ and defendant-intervenors’ motions

are granted as to plaintiffs’ first claim.

II. Second Claim: Extraterritorial Legislation

Plaintiffs next allege that the Oregon Program

“violates the United States Constitution by regulating

interstate and foreign commerce that occurs wholly

48a

outside Oregon.” Pls.’ Resp. to Mots. 19 (citing Compl.

¶¶ 121–30).

The constitution, pursuant to either the dormant

Commerce Clause or principles of structural federalism embodied therein, proscribes any “statute that

directly controls commerce occurring wholly outside

the boundaries of a State.” Healy v. Beer Inst., 491 U.S.

324, 336, 109 S.Ct. 2491, 105 L.Ed.2d 275 (1989);

World–Wide Volkswagen Corp. v. Woodson, 444 U.S.

286, 293, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). The

extraterritoriality principle is rarely utilized and has

been confined to three circumstances: price control

statutes, statutes that link prices paid in-state with

those paid out-of-state, and statutes that discriminate

against out-of-state commerce. Rocky Mountain, 730

F.3d at 1101–03.

Plaintiffs paint their current extraterritorial legislation claim as discrete from the claim that was

reviewed and rejected by the Ninth Circuit because it

is independently based on principles of interstate

federalism. Nevertheless, plaintiffs recognize that,

irrespective of its constitutional basis, any such claim

is necessarily contingent upon a finding that the

“Oregon Program regulates and attempts to control

conduct that occurs in other states,” as both “the

Commerce Clause [and] principles of structural federalism [exist to] prohibit states from engaging in

extraterritorial regulation.” Pls.’ Resp. to Mots. 19–21.

Accordingly, because the Ninth Circuit expressly

held that the analogous LCFS “does not control conduct

wholly outside the state,” and is not “an impermissible

extraterritorial regulation,” plaintiffs’ claim fails as a

matter of law. Rocky Mountain, 730 F.3d at 1103–07;

see also Rocky Mountain II, 2014 WL 7004725 at *13–

14 (plaintiffs’ proposed amendment—i.e. to add a

49a

claim alleging that the LCFS was unconstitutional

under “principles of interstate federalism”—was barred

by the law of the case doctrine because, per plaintiffs

[sic] own admission, any such claim was premised on

the fact that a state “may not apply its laws to commerce that takes place wholly outside of [its] borders,

or seek to control commerce in other States”) (citations

and internal quotations and ellipses omitted); Am.

Fuels, 2015 WL 4872639 at *9–12 (dismissing, without

leave to amend, plaintiffs’ extraterritorial regulation

claim based on “principles of interstate federalism”).

Defendants’ and defendant-intervenors’ motions are

granted as to plaintiffs’ second claim.

III. Third Claim: Express Preemption

Plaintiffs’ [sic] also allege the Oregon Program is

expressly preempted by section 211(c)(4)(A)(i) of the

CAA and the RFGR, which found that “no control or

prohibition relating to the GHG methane is necessary

for transportation fuels.” Compl. ¶¶ 131–36.

The Supremacy Clause gives Congress the power

to preempt state law by, amongst other avenues,

“withdraw[ing] specified powers from the States by

enacting a statute containing an express preemption

provision.” Arizona v. United States, ––– U.S. –––, 132

S.Ct. 2492, 2500–01, 183 L.Ed.2d 351 (2012) (citation

omitted). When a federal act contains an express

preemption provision, the court’s primary task is to

“identify the domain expressly pre-empted by that

language.” Medtronic, Inc. v. Lohr, 518 U.S. 470, 484,

116 S.Ct. 2240, 135 L.Ed.2d 700 (1996). The court

“focus[es] on the plain wording of the clause, which

necessarily contains the best evidence of Congress’

pre-emptive intent.” CSX Transp., Inc. v. Easterwood,

507 U.S. 658, 664, 113 S.Ct. 1732, 123 L.Ed.2d 387

(1993).

50a

The CAA authorizes the EPA. [sic] to regulate fuels

and their emissions. 42 U.S.C. § 7545. Under Section

211(c)(1), the EPA may regulate a fuel if that fuel or

its emission product “causes, or contributes, to air

pollution . . . that may reasonably be anticipated to

endanger the public health or welfare.” 42 U.S.C.

§ 7545(c)(1). The CAA also includes an express preemption provision under section 211(c)(4):

no State (or political subdivision thereof) may prescribe or. [sic] attempt to enforce, for purposes of

motor vehicle emission control, any control or

prohibition respecting any characteristic or

component of a fuel or fuel additive in a motor

vehicle or motor vehicle engine—

(i) if the [EPA] has found that no control or

prohibition of the characteristic or component of

a fuel or fuel additive under paragraph (1) is

necessary and has published his [sic] finding in

the Federal Register, or

(ii) if the [EPA] has prescribed under paragraph

(1) a control or prohibition applicable to such characteristic or component of a fuel or fuel additive,

unless State prohibition or control is identical to

the prohibition or control prescribed by the [EPA].

42 U.S.C. § 7545(c)(4)(A). Thus, subsection (ii), which

is not at issue in this case, is preemption by affirmative, positive EPA regulation, whereas subsection (i) is

preemption by affirmative, negative EPA regulation.

See 62 Fed.Reg. 10,690, 10,693 (“[s]ection 211(c)(4)

applies only where EPA has affirmatively decided to

regulate a particular fuel characteristic or component,

or has affirmatively found that no such regulation is

necessary”).

51a

Section 211(k) of the CAA, in turn, requires the EPA

to control fuel to achieve the “greatest reduction in emissions of ozone forming volatile organic compounds . . .

through the reformulation of conventional gasoline.”

42 U.S.C. § 7545(k)(1)(A). In 1994, the EPA issued the

RFGR, the purpose of which is “to improve air quality

by requiring that gasoline be reformulated to reduce

motor vehicle emissions of toxic and tropospheric

ozone-forming compounds, as prescribed by section

211(k)(1).” 59 Fed.Reg. 7716. To meet the obligations

of section 211(k)(1), the RFGR positively and exclusively

regulates ozone-forming volatile organic compounds

(“VOC”), such that states are expressly preempted

from setting different VOC restrictions. Id. at 7722–

23, 7809; 42 U.S.C. § 7545(c)(4)(A)(ii). The EPA

concluded, in plaintiffs’ own words, that methane was

“excluded from regulation under Sections 211(c) and

211(k)” because it did not pose a sufficient threat to

the public health or welfare. Pls.’ Resp. to Mots. 23

(citations omitted). Specifically, the EPA found that

“methane would be excluded from the definition of

VOC on the basis of its low reactivity.” 59 Fed.Reg. at

7722–23.

As such, the plain language of the RFGR did not

affirmatively find that no control or prohibition of

methane was necessary. Rather, the EPA determined

only that methane was not an ozone-forming VOC

under section 211(k) and therefore not subject to

regulation under section 211(c)(1). In other words, the

EPA’s sole finding relating to preemption was under

section 211(c)(4)(A)(ii)—i.e. that its standard for ozoneforming VOCs should preempt non-identical state

regulation. See 59 Fed.Reg. at 7809 (“dissimilar State

[VOC] controls [are] preempted”). Because the RFGR’s

limited discussion of methane says nothing about the

need for an affirmative, negative regulation pursuant

52a

to section 211(c)(4)(A)(i), this fuel component is not

covered under the CAA’s express preemption provision.

This reading is consistent with the recognition

that air pollution prevention is within the states’

traditional authority—for which “there is a general

presumption against preemption” absent a “clear and

manifest” expression of intent by Congress. Oxygenated

Fuels Ass’n, Inc. v. Davis, 331 F.3d 665, 668–73 (9th

Cir.2003) (citations and internal quotations omitted);

see also 40 C.F.R. § 80.1 (“[n]othing in this part is

intended to preempt the ability of State or local

governments to control or prohibit any fuel or additive

for use in motor vehicles and motor vehicle engines

which is not explicitly regulated”); 62 Fed. Reg. at

10,693 (“as a policy matter, EPA’s decision to regulate

[certain fuel components in reformulated gasoline]

areas did not encompass a determination that states

should not or need not regulate that characteristic

outside of those areas”). The CAA’s “sweeping and

explicit” savings clause is further textual evidence

that where, as here, the EPA has not made an

affirmative finding that no control is necessary, the

states retain authority to regulate air pollutants.

Exxon Mobil Corp. v. Envtl. Prot. Agency, 217 F.3d

1246, 1255 (9th Cir.2000) (citing 42 U.S.C. § 7416).

Moreover, as State Intervenors observe, the EPA

has spoken unequivocally when it intends to invoke

section 211(c)(4)(A)(i). State Intervenors’ Mot. Dismiss

16. For instance, in relation to fuel oxygen content, the

EPA “propos[ed] to issue a finding that ‘no control or

prohibition [is] necessary’ under section 211(c)(4)(A)(i),”

with the “effect [being] to preempt state controls.”

57 Fed.Reg. 47,849, 47,849. In contrast, the RFGR

contains no such language concerning methane, or any

53a

other component of fuel, and instead only speaks to

VOC controls. 59 Fed.Reg. at 7809.

In sum, plaintiffs erroneously equate the EPA’s

finding that methane is not affirmatively, positively

preempted by the RFGR with an affirmative, negative

determination that no control or prohibition of methane

is necessary.13 In so doing, plaintiffs ignore the

possibility, embodied in the plain language of the

statute, that the EPA may decline to make and publish

the finding required by section 211(c)(4)(A)(i), thereby

allowing states to regulate that fuel characteristic or

component as they choose. Defendants’ and defendantintervenors’ motions are granted as to plaintiffs’ third

claim.

IV. Fourth Claim: Conflict Preemption

Lastly, plaintiffs allege that the “Oregon Program

conflicts with and stands as an obstacle to the purposes and goals of the [EISA, RFS, and] Energy Policy

Action of 2005” because it “is designed to close Oregon

as a market for certain renewable fuels (in particular,

13

The EPA made an Endangerment Finding in 2009 that

methane is a GHG which “may reasonably be anticipated to

endanger public health or welfare.” 74 Fed.Reg. 66,496, 66,497.

This is essentially the same standard that triggers the EPA’s

authority to regulate under section 211(c)(1). 42 U.S.C. § 7545(c)(1).

Contrary to plaintiffs’ assertion, the fact that the Endangerment

Finding “was issued under Section 202 of the CAA, which governs

vehicle standards—not Section 211(c), which governs fuel standards,” does not render it irrelevant. Pls.’ Resp. to Mots. 27 (emphasis

removed). The Court nonetheless agrees with plaintiffs that the

Endangerment Finding does not amend the RFGR; rather, the

Endangerment Finding speaks to the hazards of methane that

have been discovered over the past fifteen years such that, even

if the EPA had found it unnecessary to control emissions from

this component in 1994, it subsequently reversed course in light

of newfound scientific evidence. 79 Fed.Reg. 1430, 1455.

54a

certain forms of corn ethanol) produced in existing

refineries necessary to meet national renewable fuel

standards set by Congress.” Compl. ¶¶ 137–45.

“[S]tate laws are preempted when they conflict with

federal law,” including instances “where compliance

with both federal and state regulations is a physical

impossibility [or] where the challenged state law

stands as an obstacle to the accomplishment and

execution of the full purposes and objectives of

Congress.” Arizona, 132 S.Ct. at 2501 (citations and

internal quotations omitted). “What is a sufficient

obstacle is a matter of judgment, to be informed by

examining the federal statute as a whole and

identifying its purpose and intended effects.” Id.

(citation and internal quotations omitted).

Section 211(o ) of the CAA sets forth the RFS, which

was modified in 2007 by the EISA. 42 U.S.C. § 7545(o ).

The purpose of the RFS is

to ensure that transportation fuel sold or introduced into commerce in the United States (except

in noncontiguous States or territories), on an

annual average basis, contains at least the applicable volume of renewable fuel, advanced biofuel,

cellulosic biofuel, and biomass-based diesel, determined in accordance with subparagraph (B) and,

in the case of any such renewable fuel produced

from new facilities that commence construction

after December 19, 2007, achieves at least a 20

percent reduction in lifecycle greenhouse gas emis-

55a

sions compared to baseline lifecycle greenhouse

gas emissions.

42 U.S.C. § 7545(o )(2)(A)(i).14

As a threshold matter, plaintiffs’ [sic] lack prudential

standing as they do not contend to generate or sell the

type of biofuel the Oregon Program allegedly penalizes, or that their interests are closely aligned with

those whose rights are at issue. Critically, plaintiffs do

not assert that they or any of their members own or

sell fuel from exempted biofuel plants; plaintiffs also

do not allege any hindrance to the exempted biofuel

facilities’ ability to protect their own interests. Pls.’

Resp. to Mots. 35 (citing Compl. ¶¶ 8–10, 17–20); see

also State Intervenors’ Mot. Dismiss 20 (noting plaintiffs “oppose[d] the very type of mandate [they] claim

Congress created and with which [they] allege [the

Oregon] Program conflicts,” and that several ethanol

“associations are plaintiffs in one of the consolidated

Rocky Mountain cases”) (citations omitted). Given these

pleading deficiencies, in conjunction with plaintiffs’

failure to point to any additional facts that might

confer subject-matter jurisdiction, the Court concludes

that the fourth claim is premised on the rights of nonpartes—namely, those who produce qualifying renewable fuels in facilities constructed pre-December 2007.

14

In opposing dismissal, plaintiffs cite to a different provision

of the EISA, which does not concern the RFS, as defining the RFS’

purpose. Compare Pls.’ Resp. to Mots. 30 (citing EISA § 806,

codified at 42 U.S.C. § 17285), with Compl. ¶¶ 104–05 (citing

EISA § 202, codified at 42 U.S.C. § 7545(o )(2)). Assuming its

relevance to the Court’s preemption analysis, that provision

espouses many compatible goals, all of which relate to increasing

the United States’ reliance on “domestic renewable resources”

and “increas[ing] [the] use of renewable energy.” 42 U.S.C.

§ 17285.

56a

See Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315,

82 L.Ed.2d 556 (1984) (the court lacks subject-matter

jurisdiction, due to prudential limitations, where a

plaintiff “rais[es] another person’s legal rights”); see

also Elk Grove Unified School Dist. v. Newdow, 542

U.S. 1, 15 n. 7, 124 S.Ct. 2301, 159 L.Ed.2d 98 (2004)

(prudential standing limitations exist to ensure “that

the most effective advocate of the rights at issue is

present to champion them”) (citations and internal

quotations omitted).

Irrespective of subject-matter jurisdiction, plaintiffs’

allegations are implausible in four respects. First,

plaintiffs maintain “that Section 211(o ) was enacted

to ensure a continued market for ethanol from existing

ethanol plants.” Pls.’ Resp. to Mots. 30–31. Yet the

expressly stated purpose and intended effects of the

RFS is to increase the United States’ reliance on renewable fuel sources and reduce GHG emissions. 42 U.S.C.

§ 7545(o )(2)(A)(i). Because section 211(o )(2)(A)(i)

makes no mention of ensuring a market for thenexisting facilities, the fact that Congress elected to

exempt such facilities from the requirement that certain

fuels achieve a 20% reduction in lifecycle GHG

emissions does not confer upon them a preferred or

dominant status.

Contrary to plaintiffs’ assertion, the volume requirements for renewable fuel set in section 211(o )(2)(B) do

not include a minimum amount that must be met with

corn ethanol generally, let alone from corn ethanol

produced in facilities constructed before December

2007; this statute simply articulates applicable volumes

of renewable fuel required for the calendar years of

2006 through 2011. 42 U.S.C. § 7545(o )(2)(B); see also

42 U.S.C. § 7545(o )(1)(B)(i) (“advanced biofuel,” the

use of which is encouraged under the RFS, “means

57a

renewable fuel, other than ethanol derived from corn

starch”). The Oregon Program is also not an EPA regulation, such that the anti-geographic restriction provision

embodied in section 211(o )(2)(A)(iii) is not implicated.

See 42 U.S.C. § 7545(o )(2)(A)(iii) (speaking only to the

EPA’s ability to issue “regulations . . . under clause (i)

[that] restrict geographic areas in which renewable

fuel may be used”).

Second, both the EISA’s savings clause and legislative history reflect that Congress did not intend to

preempt state regulation of transportation fuels. As

part of its RFS rule-making, the EPA rejected one

commenter’s suggestion that the RFS should “preempt

state programs designed to address carbon content

and lifecycle analysis of fuels,” including “state low

carbon fuel standards,” explaining that “[i]ssues associated with State LCFS programs . . . are not germane

to the final RFS program.’’ State Intervenors’ First

Req. Judicial Notice Ex. G, at 6–715; see also id. at 4

(“these [RFS] thresholds do not constitute a specific

control on [GHGs] for transportation fuels (such as a

low carbon fuel standard)”). In fact, the EPA saw no

conflict between state low carbon fuel standards and

the RFS. See id. at 7 (“where possible [the EPA has]

attempted to structure the RF[S] program so as to be

compatible with existing State LC[F]S programs,

including coordination on lifecycle modeling”).

The EISA’s savings clause, in turn, specifies that

“nothing in the amendments made by this title to

section 211(o ) of the [CAA] shall be construed as superseding, or limiting, any more environmentally protective

requirement under . . . any other provision of State

15

Because State Intervenors did not numeralize their exhibits,

the Court refers to the page numbers assigned in the docket.

58a

or Federal law or regulation.”16 EISA § 204(b), Pub.L.

No. 110–140. While plaintiffs are correct that a savings

clause does not necessarily bar conflict preemption

principles, this case presents no actual discord between

the EISA, RFS, and Oregon Program. See Nat’l Audubon

Soc’y, Inc. v. Davis, 307 F.3d 835, 854 (9th Cir.2002)

(as amended) (where a savings clause exists, state law

is preempted only “to the extent that actual conflict

persists between state and federal policies”); see also

State ex rel. Stenehjem v. FreeEats.com, Inc., 712

N.W.2d 828, 841 (N.D.2006), cert. denied, 549 U.S.

953, 127 S.Ct. 383, 166 L.Ed.2d 270 (2006) (distinguishing Geier v. Am. Honda Motor Co., Inc., 529 U.S.

861, 120 S.Ct. 1913, 146 L.Ed.2d 914 (2000), and other

conflict preemption cases, which involved “inconsistent

and conflicting preemption provisions and savings

clauses within the federal statutes,” from one in which

“an express provision explicitly provid[es] that nothing

in the federal statute shall preempt any State law on

the precise subject matter involved in the case”)

(internal quotations omitted).

Third, as addressed in section I, the Oregon Program

neither “penalize[s] ethanol produced in existing

[Midwest] ethanol plants” nor renders these plants

16

Plaintiffs’ assertion that the Oregon Program is “[not] more

environmentally protective” because it “may instead increase

GHG emissions (or at the very least hide them)” is both unavailing and insufficient to preclude application of the EISA’s savings

clause. Pls.’ Resp. to Mots. 34; see also Rocky Mountain, 730 F.3d

at 1082 (describing the LCFS as “starting to work as intended,”

while noting that “[t]here is growing scientific and public consensus that the climate is warming and that this warming is to some

degree caused by anthropogenic GHG emissions”) (citations

omitted). This is especially true in light of the fact that they do

not make any allegations regarding this issue in the complaint.

See generally Compl.

59a

“[un]able to export their fuels to Oregon.” Pls.’ Resp. to

Mots. 30. Aside from the fact that plaintiffs’ complaint

is silent as to the carbon intensities of the ethanols

generated from these unspecified, exempted plants,

Midwestern producers have obtained some of the most

favorable treatment under the Oregon Program.

Fourth, the compliance scenarios cited by plaintiffs

in opposing dismissal do not “predic[t] Oregon’s ending

its importation of fuels from existing Midwestern

ethanol plants.” Pls.’ Resp. to Mots. 30. As a preliminary matter, these scenarios are neither predictions

nor do they provide any evidence of future market

conditions. See State Intervenors’ Second Req. Judicial

Notice Ex. I, at 3 (compliance scenarios “should not be

confused with IFC market forecasts”). Rather, ongoing

market conditions and fuel availability, amongst other

factors, will determine how compliance occurs. See, e.g.,

Def.’s Reply to Mot. Dismiss Ex. 5, at 17. Regardless,

the compliance scenarios merely demonstrate that one

category of ethanol, labeled “Corn, MW,” may drop off

in 2019, after an initial increase in 2017 and 2018.

State Intervenors’ Second Req. Judicial Notice Ex. I,

at 23. This category of ethanol, however, is defined as

corn ethanol from “conventional processes,” such that

it possesses a higher average carbon intensity. Id. at

13–15. Notably, this is not the only kind of corn

ethanol produced by Midwestern plants. Or. Admin. R.

340–253–8030 (Table 3); Rocky Mountain, 730 F.3d at

1084; State Intervenors’ Second Req. Judicial Notice

Ex. L, at 7, 11. Thus, these scenarios show conventional, higher-carbon corn ethanol from the Midwest

being replaced in Oregon’s market by other types of

corn ethanol, several of which are also produced in the

Midwest, as well as some sugar cane-based fuels from

Brazil. Given the actual tone and content of these

scenarios, combined with the fact that compliance can

60a

be achieved exclusively through purchasing credits,

plaintiffs’ conclusion that the Oregon Program will

shutter the state’s market to Midwest ethanol is not

entitled to the presumption of truthfulness. Defendants’

and defendant-intervenors’ motions are granted as to

plaintiffs’ fourth claim.

CONCLUSION

State Intervenors’ first and second requests for

judicial notice (docs. 53, 68) are GRANTED. Defendants’ motion to dismiss (doc. 51), State Intervenors’

motion to dismiss (doc. 52), and Conservation Intervenors’ motion for judgment on the pleadings (doc. 54)

are also GRANTED. Accordingly, the parties’ requests

for oral argument are DENIED as unnecessary. This

case is DISMISSED.

IT IS SO ORDERED.

61a

APPENDIX C

OREGON CLEAN FUELS PROGRAM

340-253-0000

Overview

(1) Context. The Oregon Legislature found that

climate change poses a serious threat to the economic

well-being, public health, natural resources and environment of Oregon. Section 1, chapter 907, Oregon

Laws 2007. The Oregon Clean Fuels Program will

reduce Oregon’s contribution to the global levels of

greenhouse gas emissions and the impacts of those

emissions in Oregon in concert with other greenhouse

gas reduction policies and actions by local governments, other states and the federal government.

(2) Purpose. The purpose of the Oregon Clean Fuels

Program is to reduce the amount of lifecycle greenhouse gas emissions per unit of energy by a minimum

of 10 percent below 2010 levels over a 10-year period.

This reduction goal applies to the average of all

transportation fuels used in Oregon, not to individual

fuels. A fuel user does not violate the standard by

possessing fuel that has higher carbon content than

the clean fuel standard allows.

* * *

340-253-0040

Definitions

The definitions in OAR 340-200-0020 and this rule

apply to this division. If this rule and 340-200-0020

define the same term, the definition in this rule

applies to this division.

* * *

62a

(3) “Bio-based” means produced from non-petroleum, biological renewable resources.

(4) “Biodiesel” means a diesel substitute that consists of mono-alkyl esters of long chain fatty acids

derived from plant or animal matter that complies

with ASTM D6751.

* * *

(9) “Carbon intensity” means the amount of lifecycle

greenhouse gas emissions per unit of energy of fuel

expressed in grams of carbon dioxide equivalent per

megajoule (gCO2e per MJ).

* * *

(11) “Clean fuel” means a transportation fuel whose

carbon intensity value is lower than the applicable

clean fuel standard for gasoline and gasoline substitutes in Table 1 under OAR 340-253-8010 or for diesel

and diesel substitutes in Table 2 under OAR 340-2538020.

(12) “Clean fuel standard” means the annual average carbon intensity a regulated party must comply

with, as listed in Table 1 under OAR 340-253-8010 for

gasoline and gasoline substitutes and in Table 2 under

340-253-8020 for diesel fuel and diesel substitutes.

* * *

(17) “Credit” means a unit of measure that is

generated when the carbon intensity value of a fuel

that is produced, imported, dispensed or used in

Oregon is less than the clean fuel standard. Credits

are expressed in units of metric tons of carbon dioxide

equivalent and are calculated under Table 2 under

OAR 340-253-1020.

63a

(18) “Credit generator” means any person eligible to

generate credits by providing clean fuels for use in

Oregon and who voluntarily registers to participate in

the clean fuels program, described in OAR 340-2530100(2), and specified by fuel type in Tables 1-4 under

OAR 340-253-0310 through 340-253-0340.

* * *

(20) “Deficit” means a unit of measure that is generated when the carbon intensity value of a fuel that is

produced or imported in Oregon exceeds the clean fuel

standard. Deficits are expressed in units of metric tons

of carbon dioxide equivalent and are calculated under

OAR 340-253-1020.

* * *

(28) “Fuel pathway code” means a code that represents a unique fuel type. The fuel pathway code is a

field in the CFP Online System used to represent a

specific type of fuel that has an assigned carbon

intensity value.

(29) “Gasoline” means a spark ignition engine fuel

conforming to the specifications defined in ASTM

D4814.

(30) “Gasoline substitute” means any fuel, other

than gasoline, that may be used in an engine designed

for gasoline use.

* * *

(37) “Lifecycle greenhouse gas emissions” are:

(a) The aggregated quantity of greenhouse gas

emissions, including direct emissions and significant

indirect emissions, such as significant emissions from

changes in land use associated with the fuels;

64a

(b) Measured over the full fuel lifecycle, including

all stages of fuel production, from feedstock generation

or extraction, production, distribution, and combustion of the fuel by the consumer; and

(c) Stated in terms of mass values for all greenhouse

gases as adjusted to CO2e to account for the relative

global warming potential of each gas.

* * *

(44) “OR-GREET” means the Greenhouse gases,

Regulated Emissions, and Energy in Transportation

(GREET) Argonne National Laboratory model that

DEQ modifies and maintains for use in Oregon. DEQ

will provide copies of OR-GREET upon request.

(45) “Physical transport mode code” means how a

fuel physically enters Oregon. Physical transport

mode code is a field in the CFP Online System used to

represent how a fuel was imported.

(46) “Producer” means:

(a) With respect to any liquid fuel, the person who

makes the fuel in Oregon; or

(b) With respect to any biomethane, the person who

refines, treats or otherwise processes biogas into biomethane in Oregon.

* * *

(48) “Regulated fuel” means a transportation fuel

identified under OAR 340-253-0200(2).

(49) “Regulated party” means a person responsible

for compliance with the clean fuel standards identified

under OAR 340-253-0310.

* * *

65a

(54) “Transportation fuel” means gasoline, diesel,

any other flammable or combustible gas or liquid and

electricity that can be used as a fuel for the operation

of a motor vehicle. Transportation fuel does not mean

unrefined petroleum products.

* * *

340-253-0100

Oregon Clean Fuels Program Applicability and

Requirements

(1) Regulated parties. All persons that produce in

Oregon or import into Oregon any regulated fuel must

comply with the rules in this division. The regulated

parties for regulated fuels produced or imported in

Oregon are designated under OAR 340-253-0310.

(a) Regulated parties must comply with sections (4)

through (8) below; except that:

(b) Small importers are exempt from sections (5)

through (8) below.

(2) Credit generators.

(a) The following rules designate persons eligible to

generate credits for each fuel type:

(A) OAR 340-253-0320 for compressed natural gas,

liquefied natural gas, liquefied compressed natural

gas, liquefied petroleum gas and renewable diesel;

(B) OAR 340-253-0330 for electricity; and

(C) OAR 340-253-0340 for hydrogen fuel or a

hydrogen blend.

(b) Persons eligible to be credit generators are not

required to participate in the program. Persons who

choose voluntarily to participate in the program to

66a

generate credits must comply with sections (4), (5), (7)

and (8) below.

* * *

(4) Registration.

(a) A regulated party must submit a complete

registration application to DEQ under OAR 340-2530500 for each fuel type on or before the date upon

which that party begins producing the fuel in Oregon

or importing the fuel into Oregon. The registration

application must be submitted using DEQ approved

forms.

(b) A credit generator must submit a complete

registration to DEQ under OAR 340-253-0500 for each

fuel type before it may generate credits for fuel produced, imported, dispensed or used in Oregon. DEQ

will not recognize credits allegedly generated by any

person that does not have an approved, accurate and

current registration.

(c) A broker must submit a complete registration to

DEQ under OAR 340-253-0500, or modify its existing

registration each time it enters into a new contract

with a regulated party or credit generator, before trading credits or facilitating credit generation or trading

by a regulated party or credit generator. DEQ will not

recognize the transfer of credits by a broker that does

not have an approved, accurate and current registration.

(d) When DEQ approves the registration application of a regulated party, credit generator or broker

under OAR 340-253-0500, the regulated party, credit

generator or broker must establish an account in the

CFP Online System and must use the CFP Online

System to record and report credit and deficit

67a

generation, credit trading and compliance with the

CFP rules in this division.

(5) Records. Beginning on July 1, 2015, regulated

parties, credit generators registered under subsection

(4)(b) and brokers registered under subsection (4)(c)

must develop and retain all records OAR 340-253-0600

requires.

(6) Clean fuel standards. Each regulated party

must comply with the following standards for all

transportation fuel it produces in Oregon or imports

into Oregon in each compliance period. To demonstrate compliance, regulated parties must use the

calculation method OAR 340-253-1030 specifies. Regulated parties may demonstrate compliance in each

compliance period either by producing or importing

fuel that in the aggregate meets the standard or by

obtaining sufficient credits to offset deficits for such

fuel produced or imported into Oregon.

(a) Table 1 under OAR 340-253-8010 establishes

the Oregon Clean Fuel Standard for Gasoline and

Gasoline Substitutes; and

(b) Table 2 under OAR 340-253-8020 establishes

the Oregon Clean Fuel Standard for Diesel and Diesel

Substitutes.

(7) Quarterly progress report. Regulated parties,

credit generators and brokers must submit quarterly

progress reports under OAR 340-253-0630.

(8) Annual compliance report. Regulated parties,

credit generators and brokers must submit annual

compliance reports under OAR 340-253-0650.

68a

340-253-0200

Regulated and Clean Fuels

(1) Applicability. Producers and importers of

transportation fuels listed in this rule, unless exempt

under OAR 340-253-0250, are subject to Division 253.

(2) Regulated fuels. Regulated fuels mean the

following transportation fuels:

(a) Gasoline;

(b) Diesel fuel;

(c) Denatured fuel ethanol;

(d) Biodiesel; and

(e) Any other liquid or non-liquid transportation

fuel not listed in section (3) or exempted under OAR

340-253-0250.

(3) Clean fuels. Clean fuels means a transportation

fuel with a carbon intensity value lower than the clean

fuel standard for gasoline or diesel fuel and their

substitutes in Table 1 or 2 under OAR 340-253-8010

or 340-253-8020, as applicable, for that calendar year,

such as:

(a) Bio-based compressed natural gas;

(b) Bio-based liquefied compressed natural gas;

(c) Bio-based liquefied natural gas;

(d) Electricity;

(e) Fossil compressed natural gas;

(f) Fossil liquefied compressed natural gas;

(g) Fossil liquefied natural gas;

(h) Hydrogen or a hydrogen blend;

69a

(i) liquefied petroleum gas; and

(j) Renewable diesel.

340-253-0250

Exemptions

(1) Exempt fuels. The following fuels are exempt

from the list of regulated fuels under OAR 340-2530200(2):

(a) Fuels used in small volumes: A transportation

fuel supplied for use in Oregon if the producer or

importer documents that all providers supply an

aggregate volume of less than 360,000 gasoline gallon

equivalents or diesel gallon equivalents per year.

(b) Small volume fuel producer: A transportation

fuel supplied for use in Oregon if the producer documents that:

(A) The producer has an annual production volume

of less than 10,000 gasoline gallon equivalents or

diesel gallon equivalents per year; or

(B) The producer has an annual production volume

of less than 50,000 gasoline gallon equivalents or

diesel gallon equivalents and the fuel producer uses

the entire volume in motor vehicles the producer uses

directly; or

(C) The producer is a research, development or

demonstration facility defined under OAR 330-0900100.

(c) Fuels that are exported for use outside of

Oregon.

* * *

70a

340-253-0330

Credit Generators: Electricity

(1) Applicability. This rule applies to providers of

electricity used as a transportation fuel.

* * *

340-253-0400

Fuel Carbon Intensity Values

(1) Statewide carbon intensity values.

(a) Regulated parties, credit generators and brokers

must use the statewide average carbon intensity values

in Table 3 or 4 under OAR 340-253-8030 or 8040, as

applicable, for the following fuels:

(A) Gasoline;

(B) Diesel fuel;

(C) Fossil compressed natural gas;

(D) Fossil liquefied natural gas;

(E) Liquefied petroleum gas; and

(F) Electricity, unless an electricity provider meets

the conditions under subsection (1)(b) and chooses to

obtain a different carbon intensity value.

(b) For electricity, credit generators and brokers

may obtain a carbon intensity value different from the

statewide average carbon intensity value by following

the procedures under section (3), if the electricity

provider:

(A) Is exempt from the definition of public utility

under ORS 757.005 (1)(b)(G), and is not regulated by

the Oregon Public Utility Commission; or

71a

(B) Generates lower carbon electricity at the same

location as it is dispensed into a vehicle.

(2) Carbon intensity values for established pathways. Except as provided in section (3), regulated

parties, credit generators and brokers must use the

carbon intensity value for each transportation fuel

that best matches the description in the fuel pathway

in Table 3 or 4 under OAR 340-253-8030 or 340-2538040, as applicable, and as approved through the

registration process under OAR 340-253-0500.

(3) Individual carbon intensity values.

(a) Directed by DEQ. A regulated party, credit

generator or broker must obtain and use an individual

carbon intensity value for a fuel if DEQ:

(A) Determines the fuel’s carbon intensity is not

adequately represented by any of the carbon intensity

values for established pathways in Table 3 or 4 under

OAR 340-253-8030 or 340-253-8040, as applicable; and

(B) Directs the regulated party, credit generator or

broker to obtain an individual carbon intensity value

under OAR 340-253-0450.

(b) Election of the party. A regulated party, credit

generator or broker may obtain and use an individual

carbon intensity value for a fuel if:

(A) It applies for and obtains DEQ approval under

OAR 340-253-0450; and

(B) The fuel’s carbon intensity value differs from

the carbon intensity value for the most similar fuel

pathway in Table 3 or 4 under OAR 340-253-8030 or

340-253-8040, as applicable, by at least 5.0 gCO2e per

MJ or 10 percent, whichever is less.

72a

(c) New fuel or feedstock. A regulated party, credit

generator or broker must obtain approval for an

individual carbon intensity value under OAR 340-2530450 for any fuel not included in Table 3 or 4 under

OAR 340-253-8030 or 340-253-8040, as applicable, and

for any fuel made from a feedstock not represented in

a carbon intensity value in Table 3 or Table 4 under

OAR 340-253-8030 or 340-253-8040, as applicable. A

regulated party, credit generator or broker must notify

DEQ by submitting a modification to the original

registration within 30 days of providing a new

transportation fuel for use in Oregon.

(d) Process change notification. If a fuel’s carbon

intensity value changes due to a change in refining

process in a way that increases the fuel’s carbon

intensity value by more than either 5.0 gCO2e per MJ

or 10 percent, whichever is less, the regulated party,

credit generator or broker must notify DEQ and obtain

an individual carbon intensity value under OAR 340253-0450 by submitting a modification to the original

registration under OAR 340-253-0500 within 30 days

after the refining process changes.

(e) OR-GREET. Regulated parties, credit generators and brokers must calculate all carbon intensity

values using the approved version of OR-GREET, or a

DEQ-approved comparable model for any fuel that

cannot be modeled with OR-GREET. Any variations

from the approved version of OR-GREET must be

documented as described under OAR 340-253-0450(1)

and submitted to DEQ for approval.

(4) DEQ review of carbon intensity values. Every

three years, or sooner if DEQ determines that new

information becomes available that warrants an

earlier review, DEQ will review the carbon intensity

73a

values in Table 3 or 4 under OAR 340-253-8030 or

340-253-8040 and:

(a) Must consider, at a minimum:

(A) The sources of crude and associated factors that

affect emissions such as flaring rates, extraction

technologies, capture of fugitive emissions and energy

sources;

(B) The sources of natural gas and associated factors that affect emissions such as extraction technologies, capture of fugitive emissions and energy sources;

(C) The statewide mix of electricity used in Oregon;

(D) Individual carbon intensity values that have

been approved under OAR 340-253-0450;

(E) Changes to OR-GREET;

(F) New methods to calculate lifecycle greenhouse

gas emissions;

(G) Changes in quantifying indirect land use

change; and

(H) Changes in quantifying indirect effects.

(b) Report to EQC regarding whether statewide

average carbon intensity values in Table 3 or 4 under

OAR 340-253-8030 or 340-253-8040 should be revised.

Changes to Table 3 or 4 under OAR 340-253-8030

or 340-253-8040 may only be revised through a

rulemaking.

340-253-0450

Approval for Individual Carbon Intensity Values

(1) Individual carbon intensity value approval. A

regulated party, credit generator or broker may not

74a

use an individual carbon intensity value without written DEQ approval under this rule. Individual carbon

intensity values are not available for the fuels listed

under OAR 340-253-0400(1)(a).

(a) OR-GREET modifications. To obtain an individual carbon intensity value, a regulated party, credit

generator or broker may propose a modification to

inputs into OR-GREET that more accurately reflect

the specific characteristics of the fuel or changes to

OR-GREET itself that will result in a more accurate

calculation of the carbon intensity value for a fuel. The

proposal for an individual carbon intensity value must

include:

(A) Inputs used to generate the carbon intensity

values under OAR 340-253-0400; and

(B) All modified parameters used to generate the

new fuel carbon intensity value.

(b) Other modifications. To obtain an individual

carbon intensity value, a regulated party, credit

generator or broker may propose modifications based

on any new information to calculate lifecycle greenhouse gas emissions. The proposal for an individual

carbon intensity value must include:

(A) Inputs used to generate the carbon intensity

values under OAR 340-253-0400; and

(B) All parameters used to generate the new fuel

carbon intensity value.

(2) Reliability. The regulated party, credit generator or broker must supply documentation necessary for

DEQ to determine that the method used to calculate

the individual carbon intensity value is reliable and

comparable to OR-GREET.

75a

(3) Modification submittal. The regulated party,

credit generator or broker must submit proposed

modifications under this rule electronically and must

include:

(a) Documentation that the proposed pathway has

been approved by the California Air Resources Board,

if available;

(b) A description of all modifications required by

Section (1);

(c) Supporting data and calculations; and

(d) Any other information the party would like to

submit or DEQ requests to verify the method for

calculating the proposed, individual carbon intensity

value.

(4) Review process. Within 15 workdays after

receiving any modification proposal submitted under

section (3), DEQ will determine whether the proposal

is complete.

(a) If DEQ determines the proposal is incomplete,

DEQ will notify the regulated party, credit generator

or broker and identify the deficiencies. If the party

submits supplemental information, DEQ has 15

workdays to determine if the supplemental submittal

is complete, or to notify the party and identify the

continued deficiencies.

(b) If DEQ determines the proposal is complete,

DEQ will:

(A) Publish the application on the Oregon Clean

Fuels Program website; and

(B) Approve or deny an individual carbon intensity

value.

76a

(5) DEQ approval. A regulated party, credit generator or broker may use an individual carbon intensity

value upon receiving written approval from DEQ.

DEQ will propose to incorporate all associated parameters and fuel-related information of a DEQ-approved

individual carbon intensity value into Table 3 or 4

under OAR 340-253-8030 or 340-253-8040, as applicable, in a future rulemaking.

(6) DEQ denial. If DEQ determines the proposal for

an individual carbon intensity value is not adequately

documented, DEQ will deny the modification proposal,

identify the basis for the denial, and notify the party

which carbon intensity value it is authorized to use for

the fuel.

* * *

340-253-1000

Credit and Deficit Basics

(1) Carbon intensity values.

(a) Except as provided in subsection (b), when

calculating carbon intensity values, regulated parties,

credit generators and brokers must:

(A) Use a DEQ carbon intensity value approved

under OAR 340-253-0500(4); and

(B) Express the carbon intensity value to the same

number of significant figures as shown in Table 3 or 4

under OAR 340-253-8030 or 340-253-8040, as applicable.

(b) If a regulated party, credit generator or broker

has submitted a complete registration under OAR 340253-0500 and DEQ has not approved the proposed

carbon intensity value or has not determined that a

different carbon intensity value more accurately reflects

the fuel type, the regulated party, credit generator or

77a

broker must use the carbon intensity value proposed

in its registration.

(2) Fuel quantities. Regulated parties, credit generators and brokers must express fuel quantities to the

nearest whole unit applicable for each fuel such as

gallons, standard cubic feet, kilowatt-hours or pounds.

(3) Conversion of energy. To convert other energy

units to megajoules, the regulated party, credit generator

or broker must multiply the unit by the corresponding

energy density factor based on the lower heating values

of fuels in OR-GREET using BTU to megajoules conversion of 1,055 J per BTU. Table 6 under OAR

340-253-8060 includes energy density conversions for

Oregon.

(4) Metric tons of CO2 equivalent. Regulated parties, credit generators and brokers must express credits

and deficits to the nearest whole metric ton of carbon

dioxide equivalent.

(5) Credit generation. A clean fuel credit is generated when fuel is produced, imported, dispensed or

used in Oregon, as applicable, and the carbon intensity

value of the fuel approved under OAR 340-253-0500(4)

is less than the clean fuel standard for gasoline or

diesel fuel and their substitutes in Table 1 or 2 under

OAR 340-253-8010 or 340-253-8020, as applicable.

(6) Deficit generation. A clean fuel deficit is generated when fuel is produced, imported, dispensed or

used in Oregon, as applicable, and the carbon intensity

value of the fuel approved under OAR 340-253-0500(4)

is more than the clean fuel standard for gasoline or

diesel fuel and their substitutes in Table 1 or 2 under

OAR 340-253-8010 or 340-253-8020, as applicable.

78a

340-253-1010

Fuels to Include in Credit and Deficit Calculation

(1) Fuels included. Regulated parties, credit generators and brokers must calculate credits or deficits for

all regulated fuels and clean fuels.

(2) Fuels exempted. Except as provided in section

(3), regulated parties, credit generators and brokers

may not calculate credits and deficits for fuels:

(a) Exported outside Oregon; or

(b) Exempt under OAR 340-253-0250.

(3) Voluntary inclusion. A regulated party, credit

generator or broker may choose to include in its credits

and deficits calculations fuel that is exempt under

OAR 340-253-0250(1) or sold to an exempt user under

OAR 340-253-0250(2) provided that all fuel listed on

the same delivery invoice is included.

340-253-1020

Calculating Credits and Deficits

Regulated parties, credit generators and brokers

must calculate credits or deficits for each fuel included

under 340-253-1010 by:

(1) Using credit and deficit basics as OAR 340-2531000 specifies;

(2) Calculating energy in megajoules by multiplying

the amount of fuel by the energy density of the fuel in

Table 6 under OAR 340-253-8060;

(3) Calculating the adjusted energy in megajoules

by multiplying the energy in megajoules from section

(2) by the energy economy ratio of the fuel using Table

7 or 8 under OAR 340-253-8070 or 340-253-8080, as

applicable;

79a

(4) Calculating the carbon intensity difference by

subtracting the fuel’s carbon intensity value as

approved under OAR 340-253-0500(4) from the clean

fuel standard for gasoline or diesel fuel and their

substitutes in Table 1 or 2 under OAR 340-253-8010

or 340-253-8020, as applicable;

(5) Calculating the grams of carbon dioxide

equivalent by multiplying the adjusted energy in

megajoules in section (3) by the carbon intensity

difference in section (4);

(6) Calculating the metric tons of carbon dioxide

equivalent by dividing the grams of carbon dioxide

equivalent in section (5) by 1,000,000; and

(7) Determining under OAR 340-253-1000(5) and

(6) whether credits or deficits are generated.

340-253-1030

Net Balance Calculation Deficits

(1) Small deficits. At the end of a compliance period,

a regulated party that has a net deficit balance may

carry forward a small deficit to the next compliance

period without penalty if the regulated party does not

have any credits to offset its deficits. A small deficit

exists if the amount of credits the regulated party

needs to meet the standard is 10 percent or less than

the total amount of deficits the regulated party

generated for the compliance period.

(2) Large deficits. At the end of a compliance period,

a regulated party that has a net deficit balance may

not carry forward a large deficit to the next compliance

period. A large deficit exists if the amount of credits

the regulated party needs to meet the standard is

greater than 10 percent of the total amount of deficits

the regulated party generated for the compliance

80a

period. A regulated party violates this rule if that

party has a large deficit at the end of a compliance

period.

(3) Deficit reconciliation. If a regulated party

carries a small deficit forward from the previous

compliance period, the regulated party must eliminate

the small deficit by the end of the current compliance

period. This provision does not preclude the regulated

party from carrying forward a small deficit in the

subsequent compliance period based on the total

amount of deficits the regulated party generated in the

subsequent compliance period.

340-253-1050

Credit Basics

(1) General.

(a) Clean fuel credits are a regulatory instrument

and do not constitute personal property, instruments,

securities or any other form of property.

(b) Regulated parties, credit generators and brokers

may:

(A) Retain clean fuel credits without expiration for

use within the CFP, subject to this rule and OAR 340253-1030; and

(B) Acquire or transfer clean fuel credits from or to

other regulated parties, credit generators and brokers

that are approved program users under OAR 340-2530500(4) and have account access to the CFP Online

System.

(c) Regulated parties, credit generators and brokers

may not:

(A) Use alleged credits that have not been generated in compliance with the rules in this division; or

81a

(B) Borrow or use anticipated credits from future

projected or planned carbon intensity reductions.

(2) Mandatory retirement of credits.

(a) At the end of a compliance period, a regulated

party that possesses credits must retire a sufficient

number of credits to satisfy the regulated party’s

compliance obligation for that compliance period. A

regulated party may not carry over credits to the next

compliance period if the regulated party has any

remaining deficits.

(b) At the end of a compliance period, if the total

number of credits is less than the total number of

deficits, the regulated party is subject to OAR 340-2531030.

(3) Credit transfers between parties.

(a) “Credit seller,” as used in this rule, means a

regulated party, credit generator or broker who wishes

to sell or transfer credits.

(b) “Credit buyer,” as used in this rule, means a

regulated party, credit generator or broker who wishes

to acquire credits.

(c) A credit seller and a credit buyer may enter into

an agreement to transfer credits.

(d) A credit seller may only transfer credits up to

the number of total credits in the credit seller’s CFP

Online System account.

(4) Credit transfer form.

(a) When parties intend to enter in to a credit transfer agreement, the credit seller must use the “Credit

Transfer Form” provided in the CFP Online System

and must include the following:

82a

(A) Date of the proposed credit transfer agreement;

(B) Name and FEIN of the credit seller and credit

buyer;

(C) Name and contact information of the person

who performed the transaction on the credit seller’s

and credit buyer’s behalf;

(D) The number of credits proposed to be transferred; and

(E) The price or equivalent value of the consideration (in US dollars) to be paid per metric ton of credit

proposed for transfer, excluding any fees.

(b) After receiving the credit transfer form from the

credit seller, the credit buyer must confirm the

accuracy of the information contained in the credit

transfer form using the CFP Online System.

(5) Broker. A credit seller or a credit buyer may

elect to use a broker to facilitate the transfer of credits

but may only use a broker who complies with this rule.

A broker may only facilitate the transfer of credits if

that broker:

(a) Has an approved and active registration under

OAR 340-253-0500(4);

(b) Has an account on the CFP Online System; and

(c) Complies with OAR 340-253-0100(4).

(6) Illegitimate credits.

(a) A credit generator violates these rules if it

submits information into the CFP Online System indicating that one or more credits have been generated

when such an assertion is inconsistent with the

requirements of OAR 340-253-1000 through 340-2531020. If DEQ determines that one or more clean fuel

83a

credits a credit generator claims to have generated

was not generated in compliance with these rules,

then the credit generator:

(A) Must provide an approved clean fuel credit to

replace each credit that was not properly generated, if

available; and

(B) Is also subject to enforcement for the violation.

(b) A regulated party, credit generator or broker

that has acquired one or more illegitimate credits is

subject to enforcement unless DEQ determines:

(A) The credits were acquired from a registered

regulated party, credit generator or broker with a CFP

Online System account; and

(B) The carbon intensity value of the fuel for which

the credits were generated matches the carbon intensity

value approved by DEQ for that fuel pathway.

(7) Public disclosure.

(a) List of DEQ-approved registered parties. DEQ

will maintain a current list of regulated parties, credit

generators and brokers that have had their registrations approved by DEQ under OAR 340-253-0500(4)

and will make that list available on-line. The list will

include, at a minimum, the name of the regulated

party, credit generator or broker and whether the regulated party is a large importer, a small importer or a

producer.

(b) Clean Fuels Program status report. DEQ will

publish a quarterly report that summarizes the aggregate CFP credit and deficit generation for the:

(A) Most recent quarter;

(B) Past quarters of the current compliance period;

and

84a

(C) Past annual compliance periods.

(c) Clean Fuels Program credit report. DEQ will

publish a monthly report that summarizes the aggregate CFP credit transfer information for:

(A) Most recent month;

(B) Past months of the current compliance period;

and

(C) Past annual compliance periods.

(d) DEQ reports will be based on information submitted into the CFP Online System.

(e) DEQ reports will represent information aggregated for all fuel transacted within the state; not by

individual parties.

* * *

85a

Table 1 – Oregon Clean Fuel Standard for Gasoline

and Gasoline Substitutes

Oregon Department of Environmental Quality

Table 1 – 340-253-8010

Oregon Clean Fuel Standard for Gasoline and

Gasoline Substitutes

Calendar Year

2015

Oregon Clean Fuel

Standard

(gCO2e per MJ)

Percent Reduction

None (Gasoline Baseline is 89.31)

2016

89.08

0.25 percent

2017

88.86

0.50 percent

2018

88.41

1.00 percent

2019

87.97

1.50 percent

2020

87.08

2.50 percent

2021

86.18

3.50 percent

2022

84.84

5.00 percent

2023

83.50

6.50 percent

2024

82.16

8.00 percent

2025 and

beyond

80.36

10.00 percent

86a

Table 2 – Oregon Clean Fuel Standard for Diesel

Fuel and Diesel Substitutes

State of Oregon Department of Environmental Quality

Table 2 – 340-253-8020

Oregon Clean Fuel Standard for Diesel Fuel and

Diesel Substitutes

Calendar Oregon Clean Fuel Standard

Year

(gCO2e per MJ)

Percent Reduction

2015

None (Diesel Baseline is 87.09)

2016

86.87

0.25 percent

2017

86.65

0.50 percent

2018

86.22

1.00 percent

2019

85.78

1.50 percent

2020

84.91

2.50 percent

2021

84.04

3.50 percent

2022

82.73

5.00 percent

2023

81.43

6.50 percent

2024

80.12

8.00 percent

2025 and

beyond

78.38

10.00 percent

87a

Table 3 – Oregon Carbon Intensity Lookup Table for

Gasoline and Gasoline Substitutes

Oregon Department of Environmental Quality

Table 3 – 340-253-8030

Oregon Carbon Intensity Lookup Table for Gasoline and

Gasoline Substitutes

Carbon Intensity Values

(gCO2e/MJ)

Fuel

Gasoline

Ethanol

from

Corn

Direct

Emissions

Land

Use or

Other

Indirect

Effect

Total

Clear gasoline, based

on a

weighted

ORGAS001

average of

gasoline

supplied to

Oregon

89.40

-

89.40

Blended

gasoline,

10% ethanol,

based on

assuming

ORGAS002

90% clear

gasoline and

10% GREET

default corn

ethanol

89.31

-

89.31

69.40

-

69.40

Pathway

Identifier

Pathway

Description

Midwest

average;

80% Dry

Mill; 20%

ETHC001 Wet Mill;

Dry DGS;

NG

88a

California

average;

80%

Midwest

Average;

ETHC002

20%

California;

Dry Mill;

Wet DGS;

NG

65.66

-

65.66

California;

Dry Mill;

ETHC003

Wet DGS;

NG

50.70

-

50.70

Midwest;

Dry Mill;

ETHC004

Dry DGS,

NG

68.40

-

68.40

Midwest;

Wet Mill,

ETHC005

60% NG,

40% coal

75.10

-

75.10

Midwest;

ETHC006 Wet Mill,

100% NG

64.52

-

64.52

Midwest;

ETHC007 Wet Mill,

100% coal

90.99

-

90.99

Midwest;

Dry Mill;

ETHC008

Wet, DGS;

NG

60.10

-

60.10

California;

Dry Mill;

ETHC009

Dry DGS,

NG

58.90

-

58.90

Midwest;

ETHC010 Dry Mill;

Dry DGS;

80% NG;

63.60

-

63.60

89a

20%

Biomass

Midwest;

Dry Mill;

Wet DGS;

ETHC011

80% NG;

20%

Biomass

56.80

-

56.80

California;

Dry Mill;

Dry DGS;

ETHC012

80% NG;

20%

Biomass

54.20

-

54.20

California;

Dry Mill;

Wet DGS;

ETHC013

80% NG;

20%

Biomass

47.44

-

47.44

2B Application*:

Midwest;

Dry Mill;

Plant energy

use not to

exceed a

value the

applicant

classifies as

confidential;

ETHC014

No grid

electricity

use; Coal

use not to

exceed 71%

of fuel use

(by energy);

Coal carbon

content not

to exceed

48%

60.99

-

60.99

90a

2B Application*:

Midwest;

Dry Mill;

Plant energy

use not to

exceed a

value the

applicant

classifies as

confidential;

No grid

electricity

use; BioETHC015

mass must

be at least

5% of the

fuel use (by

energy);

Coal use not

to exceed

66% of fuel

use (by

energy);

Coal carbon

content not

to exceed

48%

59.08

-

59.08

2B Application*:

Midwest;

Dry Mill;

Plant energy

use not to

exceed a

ETHC016 value the

applicant

classifies as

confidential;

No grid

electricity

use; Biomass must

57.16

-

57.16

91a

be at least

10% of the

fuel use (by

energy);

Coal use not

to exceed

60% of fuel

use (by

energy);

Coal carbon

content not

to exceed

48%

2B Application*:

Midwest;

Dry Mill;

Plant energy

use not to

exceed a

value the

applicant

classifies as

confidential;

No grid

electricity

use; BioETHC017

mass must

be at least

15% of the

fuel use (by

energy);

Coal use not

to exceed

54% of fuel

use (by

energy);

Coal carbon

content not

to exceed

48%

55.24

-

55.24

92a

2B Application*:

Midwest;

Dry Mill;

Plant energy

use not to

exceed a

value the

applicant

classifies as

confidential;

ETHC018

No grid

electricity

use; Coal

use not to

exceed 71%

of fuel use

(by energy);

Coal carbon

content not

to exceed

48%

59.80

-

59.80

2B Application*:

Midwest;

Dry Mill;

Plant energy

use not to

exceed a

value the

applicant

classifies as

ETHC019 confidential;

No grid

electricity

use; Biomass must

be at least

5% of the

fuel use (by

energy);

Coal use not

to exceed

57.86

-

57.86

93a

65% of fuel

use (by

energy);

Coal carbon

content not

to exceed

48%

2B Application*:

Midwest;

Dry Mill;

Plant energy

use not to

exceed a

value the

applicant

classifies as

confidential;

No grid

electricity

use; BioETHC020

mass must

be at least

10% of the

fuel use (by

energy);

Coal use not

to exceed

59% of fuel

use (by

energy);

Coal carbon

content not

to exceed

48%.

55.91

-

55.91

2B Application*:

Midwest;

ETHC021 Dry Mill;

Plant energy

use not to

exceed a

53.96

-

53.96

94a

value the

applicant

classifies as

confidential;

No grid

electricity

use; Biomass must

be at least

15% of the

fuel use (by

energy);

Coal use not

to exceed

53% of fuel

use (by

energy);

Coal carbon

content not

to exceed

48%

2A Application*:

Midwest;

Dry Mill;

15% Dry

DGS, 85%

Partially

ETHC022 Dry DGS;

NG; Plant

energy use

not to exceed

a value the

applicant

classifies as

confidential

57.16

-

57.16

2A Application*:

ETHC023 Midwest;

Dry Mill;

Partially

Dry DGS;

54.29

-

54.29

95a

NG; Plant

energy use

not to exceed

a value the

applicant

classifies as

confidential

2A Application*:

Midwest;

Dry Mill;

75% Dry

DGS, 25%

Wet DGS;

ETHC024

NG; Plant

energy use

not to exceed

a value the

applicant

classifies as

confidential

61.60

-

61.60

2A Application*: Dry

Mill; Dry

DGS; Raw

starch

hydrolysis;

Amount and

type of fuel

ETHC025 use, and

amount of

grid electricity use not

to exceed a

value the

applicant

classifies as

confidential

62.44

-

62.44

2A ApplicaETHC026 tion*: Dry

Mill; Dry

DGS; Raw

58.49

-

58.49

96a

starch

hydrolysis/

combined

heat and

power;

Amount and

type of fuel

use, and

amount of

grid electricity use not

to exceed a

value the

applicant

classifies as

confidential

2A Application*: Dry

Mill; Dry

DGS; Raw

starch

hydrolysis/

biomass &

landfill gas

fuels;

Amount and

ETHC027

type of fuel

use, and

amount of

grid electricity use not

to exceed a

value the

applicant

classifies as

confidential

58.50

-

58.50

2A Application*: Dry

ETHC028 Mill; Dry

DGS; Raw

starch

hydrolysis/

61.66

-

61.66

97a

corn

fractionation;

Amount and

type of fuel

use, and

amount of

grid electricity use not

to exceed a

value the

applicant

classifies as

confidential

2A Application*: Dry

Mill; Dry

DGS

Conventional cook/

combined

heat and

power;

Amount and

ETHC029

type of fuel

use, and

amount of

grid electricity use not

to exceed a

value the

applicant

classifies as

confidential;

60.52

-

60.52

2A Application*: Dry

Mill; Dry

DGS; Raw

ETHC030 starch

hydrolysis/

biogas

process fuel;

Amount and

44.70

-

44.70

98a

type of fuel

use, and

amount of

grid electricity use not

to exceed a

value the

applicant

classifies as

confidential

2A Application*: Dry

Mill; Wet

DGS; Raw

starch

hydrolysis;

Amount and

type of fuel

ETHC031 use, and

amount of

grid electricity use not

to exceed a

value the

applicant

classifies as

confidential

53.69

-

53.69

2A Application*: Dry

Mill; Wet

DGS; Raw

starch

hydrolysis/

combined

ETHC032 heat and

power;

Amount and

type of fuel

use, and

amount of

grid electricity use not

50.01

-

50.01

99a

to exceed a

value the

applicant

classifies as

confidential

2A Application*: Dry

Mill; Wet

DGS; Raw

starch

hydrolysis/

corn

fractionation;

Amount and

type of fuel

ETHC033

use, and

amount of

grid

electricity

use not to

exceed a

value the

applicant

classifies as

confidential

50.26

-

50.26

2A Application*: Dry

Mill; Wet

DGS;

Conventional cook/

combined

heat and

ETHC034 power;

Amount and

type of fuel

use, and

amount of

grid electricity use not

to exceed a

value the

50.47

-

50.47

100a

applicant

classifies as

confidential

2A Application*: Dry

Mill; Wet

DGS; Raw

the starch

hydrolysis/

corn

fractionation;

Amount and

ETHC035 type of fuel

use, and

amount of

grid electricity use not

to exceed a

value the

applicant

classifies as

confidential

Ethanol

from

Sugarcane

43.21

-

43.21

ETHS001

Brazilian

sugarcane

using

average

production

processes

27.40

-

27.40

ETHS002

Brazilian

sugarcane

with

average

production

process,

mechanized

harvesting

and

electricity

co-product

credit

12.40

-

12.40

ETHS003

Brazilian

sugarcane

20.40

-

20.40

101a

with

average

production

process and

electricity

co-product

credit

ETHS004

2B Application*:

Brazilian

sugarcane

processed in

the CBI with

average

production

process;

Thermal

process

power

supplied

with NG

32.94

-

32.94

ETHS005

2B Application*:

Brazilian

sugarcane

processed in

the CBI with

average

production

process,

mechanized

harvesting

and

electricity

co-product

credit;

Thermal

process

power

supplied

with NG

17.94

-

17.94

102a

Compressed

Natural

Gas

ETHS006

2B Application*:

Brazilian

sugarcane

processed in

the CBI with

average

production

process and

electricity

co- product

credit;

Thermal

process

power

supplied

with NG

25.94

-

25.94

CNG002

North

American

NG delivered via

pipeline;

compressed

in OR

68.00

-

68.00

CNG003

Landfill gas

(biomethane)

cleaned up

to pipeline

quality NG;

compressed

in OR

11.26

-

11.26

CNG004

Dairy

Digester

Biogas to

CNG

13.45

-

13.45

CNG005

Biomethane

produced

from the

high-solids

(greater

than 15

percent total

-15.29

-

-15.29

103a

solids)

anaerobic

digestion of

food and

green

wastes;

compressed

in OR

CNG006

North

American

landfill gas

to pipelinequality

biomethane;

delivered via

pipeline;

compressed

in OR

33.02

-

33.02

LNG001

North

American

NG delivered via

pipeline;

liquefied in

OR using

liquefaction

with 80%

efficiency

83.13

-

83.13

LNG002

North

American

NG delivered via

pipeline;

liquefied in

OR using

liquefaction

with 90%

efficiency

72.38

-

72.38

LNG003

Overseassourced

LNG delivered as LNG

93.37

-

93.37

Liquefied

Natural

Gas

104a

to OR;

re-gasified

then

re-liquefied

in OR using

liquefaction

with 80%

efficiency

LNG004

Overseassourced

LNG delivered as LNG

to OR;

re-gasified

then

re-liquefied

in OR using

liquefaction

with 90%

efficiency

82.62

-

82.62

LNG005

Overseassourced

LNG delivered as LNG

to OR; no regasification

or reliquefaction

in OR

77.50

-

77.50

LNG006

Landfill Gas

(biomethane)

to LNG

liquefied in

OR using

liquefaction

with 80%

efficiency

26.31

-

26.31

LNG007

Landfill Gas

(biomethane)

to LNG

liquefied in

OR using

15.56

-

15.56

105a

liquefaction

with 90%

efficiency

Liquefied

Petroleum

Gas

Electricity

Hydrogen

LNG008

Dairy

Digester

Biogas to

LNG

liquefied in

OR using

liquefaction

with 80%

efficiency

28.53

-

28.53

LNG009

Dairy

Digester

Biogas to

LNG

liquefied in

OR using

liquefaction

with 90%

efficiency

17.78

-

17.78

LPG001

Liquefied

petroleum

gas, crude

and natural

gas mix

83.05

-

83.05

ELC001

Oregon

average

electricity

mix

108.29

-

108.2

9

Compressed

H2 from

central

reforming of

HYGN001 NG (includes 142.20

liquefaction

and regasification

steps)

-

142.2

0

HYGN002 Liquid H2

from central

-

133.0

0

133.00

106a

reforming of

NG

Compressed

H2 from

central

reforming of

HYGN003 NG (no

liquefaction

and regasification

steps)

98.80

-

98.80

Compressed

H2 from onHYGN004 site

reforming of

NG

98.30

-

98.30

Compressed

H2 from

on-site

HYGN005 reforming

with

renewable

feedstocks

76.10

-

76.10

107a

Table 4 – Oregon Carbon Intensity Lookup Table

for Diesel and Diesel Substitutes

Oregon Department of Environmental Quality

Table 4 – 340-253-8040

Oregon Carbon Intensity Lookup Table for Diesel and Diesel

Substitutes

Carbon Intensity

Values (gCO2e/MJ)

Fuel

Diesel

Biodiesel

Pathway

Identifier

Pathway

Description

Land

Direct Use or

Emis- Other Total

sions Indirect

Effect

Clear diesel,

based on a

weighted

ORULSD001 average of

diesel fuel

supplied to

Oregon

89.00

-

89.00

Blended

diesel, 5%

biodiesel,

based on

assuming

ORULSD002 95% clear

diesel and

5% GREET

default

soybean

biodiesel

87.09

-

87.09

Conversion

of Midwest

soybeans to

biodiesel

(fatty acid

methyl

esters FAME)

21.25

-

21.25

BIOD001

108a

BIOD002

Conversion

of waste oils

(Used

Cooking Oil)

to biodiesel

(fatty acid

methyl

estersFAME)

where

“cooking” is

required

15.84

-

15.84

BIOD003

Conversion

of waste oils

(Used

Cooking Oil)

to biodiesel

(fatty acid

methyl

estersFAME)

where

“cooking” is

not required

11.76

-

11.76

BIOD004

Conversion

of waste oils

(Used

Cooking Oil)

to biodiesel

(fatty acid

methyl

estersFAME)

where

“cooking” is

required.

Fuel

produced in

the Midwest

18.72

-

18.72

BIOD005

Conversion

of waste oils

(Used

13.83

-

13.83

109a

Cooking Oil)

to biodiesel

(fatty acid

methyl

esters FAME)

where

“cooking” is

not required.

Fuel produced in the

Midwest

Renewable

Diesel

BIOD007

Conversion

of corn oil,

extracted

from distillers grains

prior to the

drying

process, to

biodiesel

4.00

-

4.00

RNWD001

Conversion

of Midwest

soybeans to

renewable

diesel

20.16

-

20.16

RNWD002

Conversion

of tallow to

renewable

diesel using 39.33

higher

energy use

for rendering

-

39.33

RNWD003

Conversion

of tallow to

renewable

diesel using

lower energy

use for rendering

-

19.65

19.65

110a

CNG002

North

American

NG delivered via

pipeline;

compressed

in OR

68.00

-

68.00

CNG003

Landfill gas

(biomethane)

cleaned up

to pipeline

11.26

quality NG;

compressed

in OR

-

11.26

CNG004

Dairy

Digester

Biogas to

CNG

13.45

-

13.45

CNG005

Biomethane

produced

from the

high- solids

(greater

than 15

percent total

-15.29

solids)

anaerobic

digestion of

food and

green

wastes; compressed in

OR

-

-15.29

CNG006

North

American

landfill gas

to pipelinequality

biomethane;

delivered via

pipeline;

-

33.02

Compressed

Natural

Gas

33.02

111a

compressed

in OR

LNG001

North

American

NG delivered via

pipeline;

liquefied in

OR using

liquefaction

with 80%

efficiency

83.13

-

83.13

LNG002

North

American

NG delivered via

pipeline;

liquefied in

OR using

liquefaction

with 90%

efficiency

72.38

-

72.38

LNG003

Overseassourced LNG

delivered as

LNG to OR;

re-gasified

then

93.37

re-liquefied

in OR using

liquefaction

with 80%

efficiency

-

93.37

LNG004

Overseassourced LNG

delivered as

LNG to OR;

82.62

re-gasified

then

re-liquefied

in OR using

liquefaction

-

82.62

Liquefied

Natural

Gas

112a

with 90%

efficiency

LNG005

Overseassourced LNG

delivered as

LNG to OR;

no re77.50

gasification

or reliquefaction

in OR

-

77.50

LNG006

Landfill Gas

(bio-methane)

to LNG

liquefied in

26.31

OR using

liquefaction

with 80%

efficiency

-

26.31

LNG007

Landfill Gas

(bio-methane)

to LNG

liquefied in

15.56

OR using

liquefaction

with 90%

efficiency

-

15.56

LNG008

Dairy

Digester

Biogas to

LNG

liquefied in

OR using

liquefaction

with 80%

efficiency

28.53

-

28.53

LNG009

Dairy

Digester

Biogas to

LNG

liquefied in

17.78

-

17.78

113a

OR using

liquefaction

with 90%

efficiency

Liquefied

Petroleum

Gas

Electricity

LPG001

Liquefied

petroleum

gas, crude

and natural

gas mix

83.05

-

83.05

ELC001

Oregon

average

electricity

mix

108.29

-

108.29

HYGN001

Compressed

H2 from

central

reforming of

NG (includes 142.20

liquefaction

and regasification

steps)

-

142.20

HYGN002

Liquid H2

from central

133.00

reforming of

NG

-

133.00

HYGN003

Compressed

H2 from

central

reforming of

NG (no

liquefaction

and regasification

steps)

98.80

-

98.80

HYGN004

Compressed

H2 from

on-site

reforming of

NG

98.30

-

98.30

Hydrogen

114a

HYGN005

Compressed

H2 from

on-site

reforming

with

renewable

feedstocks

* * *

76.10

-

76.10

115a

APPENDIX D

UNITED STATES DISTRICT COURT

DISTRICT OF OREGON

PORTLAND DIVISION

————

CV No. 3:15-cv-00467

————

AMERICAN FUEL & PETROCHEMICAL MANUFACTURERS,

AMERICAN TRUCKING ASSOCIATIONS, INC.,

A TRADE ASSOCIATION, AND CONSUMER ENERGY

ALLIANCE, A TRADE ASSOCIATION,

Plaintiffs,

v.

JANE O’KEEFFE, ED ARMSTRONG, MORGAN RIDER,

COLLEEN JOHNSON, AND MELINDA EDEN, IN THEIR

OFFICIAL CAPACITIES AS MEMBERS OF THE OREGON

ENVIRONMENTAL QUALITY COMMISSION; DICK

PEDERSEN, JONI HAMMOND, WENDY WILES, DAVID

COLLIER, JEFFREY STOCUM, CORY-ANN WIND, LYDIA

EMER, LEAH FELDON, GREG ALDRICH, AND SUE

LANGSTON, IN THEIR OFFICIAL CAPACITIES AS OFFICERS

AND EMPLOYEES OF THE OREGON DEPARTMENT OF

ENVIRONMENTAL QUALITY, ELLEN F. ROSENBLUM, IN

HER OFFICIAL CAPACITY AS ATTORNEY GENERAL OF THE

STATE OF OREGON; AND KATE BROWN, IN HER OFFICIAL

CAPACITY AS GOVERNOR OF THE STATE OF OREGON,

Defendants.

————

COMPLAINT FOR DECLARATORY AND

INJUNCTIVE RELIEF

42 USC § 1983; 28 USC §§ 2201-02

116a

Plaintiffs American Fuel & Petrochemical Manufacturers (“AFPM”), American Trucking Associations,

Inc. (“ATA”), and Consumer Energy Alliance (“CEA”),

(collectively referred to as “Plaintiffs”) allege as follows:

INTRODUCTION AND SUMMARY

1. This is an action for declaratory, injunctive and

other relief brought by Plaintiffs against (i) Jane

O’Keeffe, Ed Armstrong, Morgan Rider, Colleen

Johnson, and Melinda Eden in their official capacities

as members of the State of Oregon’s Environmental

Quality Commission (EQC); (ii) Dick Pedersen, Joni

Hammond, Wendy Wiles, David Collier, Jeffrey Stocum,

Cory-Ann Wind, Lydia Emer, Leah Feldon, Greg

Aldrich, and Sue Langston in their official capacities

as officers and employees of the Oregon Department of

Environmental Quality (DEQ); (iii) Ellen F. Rosenblum

in her official capacity as attorney general of Oregon;

and (iv) Kate Brown in her official capacity as governor of Oregon.

2. Plaintiffs seek injunctive and declaratory relief

enjoining implementation and enforcement of Oregon’s

Clean Fuels Program, OAR §§ 340-253-0000, et seq.,

(Oregon Program) and declaring that the Oregon

Program violates the United States Constitution and

is preempted by the federal Clean Air Act and other

federal statutes.

3. First, the Oregon Program violates the Commerce Clause of the United States Constitution because

it discriminates against transportation fuels imported

into Oregon with the intended purpose and effect of

promoting the development of in-state fuel production,

promoting economic development in Oregon, keeping

more money in Oregon over other states, and discouraging the use of fuels from outside of Oregon.

117a

4. Second, the Oregon Program violates both the

Commerce Clause and the principles of interstate

federalism embodied in the federal structure of the

United States Constitution by attempting to regulate

and control economic conduct occurring outside the

borders of Oregon, including the extraction, production and distribution of transportation fuels outside of

Oregon in interstate and foreign commerce.

* * *

I. THE PARTIES

A. Plaintiffs

7. Plaintiff AFPM is a national trade association of

more than 400 companies. AFPM’s members include

virtually all United States refiners and petrochemical

manufacturers. AFPM’s members supply consumers

nationwide with a wide variety of products and services used daily in their homes and businesses. These

products include gasoline, diesel fuel, and the chemicals that serve as “building blocks” in making diverse

products, such as plastics, clothing, medicine, and

computers. The regulation of the interstate and international market for transportation fuel is of vital

concern to AFPM and its membership.

8. A number of AFPM’s members produce and sell

gasoline, diesel and ethanol used as transportation

fuels in Oregon, and several of AFPM’s members

import such gasoline, diesel and ethanol themselves

into Oregon. According to Oregon’s Department of

Environmental Quality, the Oregon Program imposes

economic and administrative burdens on regulated

parties, including importers, that must satisfy the

annual carbon intensity standards set forth in the

Oregon Program, as well as the Oregon Program’s

administrative burdens. In addition, other AFPM

118a

members sell gasoline, diesel and ethanol to companies that then import the products into Oregon. The

Oregon Program adversely affects these members’

sales by increasing the regulatory cost of using these

products in Oregon. The Oregon Program thus illegally imposes burdens on AFPM’s members importing

transportation fuels into Oregon or selling them to

Oregon importers subject to the Oregon Program.

9. AFPM’s members sell transportation fuels

throughout Oregon, including in the area falling under

the Portland Division of this Court.

10. AFPM brings this lawsuit on behalf of its

members, one or more of which are parties regulated

under the Oregon Program and which would possess

standing to challenge the Oregon Program on their

own behalf.

11. Plaintiff ATA is the national association of

the trucking industry, comprising motor carriers,

state trucking associations, and national trucking

conferences, and was created to promote and protect

the interests of the national trucking industry.

12. ATA’s direct membership includes approximately 2,000 trucking companies and industry suppliers

of equipment and services; and in conjunction with 50

affiliated state trucking organizations, it represents

over 30,000 motor carriers of every size, type, and class

of motor carrier operation.

13. The motor carriers represented by ATA haul a

significant portion of the freight transported by truck

in the United States and virtually all of them operate

in interstate commerce among the States.

14. Several of ATA’s members buy transportation

fuels in Oregon for use in Oregon. The Oregon Program

119a

increases the regulatory costs of importing such fuels,

and some of these costs will be passed along to

members of ATA who buy these fuels.

15. ATA’s members buy transportation fuels

throughout Oregon, including in the area falling under

the Portland Division of this Court.

16. ATA brings this lawsuit on behalf of its members, one or more of which would possess standing to

challenge the Oregon Program on their own behalf.

17. Plaintiff CEA is a national association of more

than 400,000 individual members representing every

sector of the United States economy. CEA’s members

include both transportation fuel end-users and

producers and sellers of gasoline, diesel and ethanol,

both in Oregon and elsewhere in the United States.

The regulation of the interstate and international

market for transportation fuel is of vital concern to

CEA and its membership.

18. A number of CEA’s members produce and sell

gasoline, diesel and ethanol used as transportation

fuels in Oregon, and several of CEA’s members import

such gasoline, diesel and ethanol themselves into

Oregon. According to DEQ, the Oregon Program imposes

economic and administrative burdens on regulated

parties, including importers, that must satisfy the

annual carbon intensity standards set forth in the

Oregon Program, as well as filing requirements and

other administrative burdens.

19. Further, several of CEA’s members buy

gasoline- and diesel-based transportation fuels in Oregon

for use in Oregon. The Oregon Program increases the

regulatory costs of importing such fuels, and some of

these costs will be passed along to members of CEA

who buy these fuels. CEA’s members buy and sell

120a

transportation fuels throughout Oregon, including in

the area falling under the Portland Division of this

Court.

20. CEA brings this lawsuit on behalf of its members, one or more of which are parties regulated under

the Oregon Program and which would possess standing to challenge the Oregon Program on their own

behalf.

21. Neither the claims asserted nor the relief sought

in the Complaint requires the participation of any

individual member of AFPM, ATA, or CEA.

B. Defendants

22. Defendants Jane O’Keeffe, Ed Armstrong,

Morgan Rider, Colleen Johnson, and Melinda Eden

are members of the State of Oregon’s Environmental

Quality Commission, which adopted the Oregon Program. They are being sued in their official capacities.

23. Defendants Dick Pedersen, Joni Hammond,

Wendy Wiles, David Collier, Jeffrey Stocum, Cory-Ann

Wind, Lydia Emer, Leah Feldon, Greg Aldrich and Sue

Langston are officers or employees of the State of

Oregon’s Department of Environmental Quality, which

is tasked with implementing the Oregon Program.

These defendants are responsible for implementing

and facilitating the implementation of the Oregon

Program. Each defendant is sued in his or her official

capacity.

24. Defendant Ellen F. Rosenblum is the Attorney

General of the State of Oregon. Defendant Rosenblum

is responsible for the enforcement of the Oregon

Program and is being sued in her official capacity.

25. Defendant Kate Brown is the Governor of the

State of Oregon. Defendant Brown is responsible for

121a

the enforcement of the Oregon Program and is being

sued in her official capacity.

II. JURISDICTION AND VENUE

26. Subject matter jurisdiction is founded on 28

USC §§ 1331 and 1343 because this case arises under

the Consti

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