American Fuel & Petrochemical Manufacturers et al v. O'Keeffe et al

Filing 71

OPINION AND ORDER: State Intervenors' first and second requests for judicial notice ( 53 , 68 ) are GRANTED. Defendants' motion to dismiss 51 , State Intervenors' motion to dismiss 52 , and Conservation Intervenors' mo tion for judgment on the pleadings 54 are also GRANTED. Accordingly, the parties' requests for oral argument are DENIED as unnecessary. This case is DISMISSED. See formal OPINION AND ORDER. Signed on 9/23/2015 by Chief Judge Ann L. Aiken. (rh)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
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.
Page 1 - OPINION AND ORDER

Case No. 3:15-cv-00467-AA
OPINION AND ORDER

AIKEN, Chief Judge:
Defendants Jane O'Keeffe, Ed Armstrong, Morgan Rider, Colleen
Johnson, Melinda Eden,
David Collier,

Dick Pederson,

Jeffrey Stocum,

Joni Hammond, Wendy Wiles,

Cory-Ann Wind,

Lydia Emer,

Leah

Feldon, Greg Aldrich, Sue Langton, 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.
Inc.,

Defendant-intervenors

Climate

Environmental

Solutions,
Defense

Oregon

Natural

Fund,

Environmental

Resources

and

Sierra

Defense

Club

Council,
Council,

(collectively

"Conservation Intervenors") also move for judgment on the pleadings
under Fed.
defendants'

R.

Ci v.

P.

12 (c) . 1 For the reasons set forth below,

and defendant-intervenors'

motions are granted,

and

this case is dismissed.
BACKGROUND

In 2007,

the Oregon legislature

seriously threatened Oregon's
health.

1

Or.

Rev.

Stat.

§

found that climate change

economy,
468A.200.

environment,
These

and public

threats

included

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.
Page 2 - OPINION AND ORDER

"[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. of

responsibility

to

reduce

the

state

the

life

impacts

and to meet
and

the

[Oregon's]

pace

of

global

warming." Id.
In

2009,

resolved

to

lower

GHG

emissions

from

transportation fuels, which, at 30%, account for the largest single
market

share.

Specifically,

~

Compl.
via

House

30;

Or.

Bill

Admin.

2186,

the

R.

340-253-0000 (1).

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

Program")

2

2

Oregon

Compl.

~~

by

10%

over

a

10-year

period

("Oregon

30-31; Or. Admin. R. 340-253-0000 (2)- (3).

Lifecycle GHG emissions are the "aggr~gated 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
Page 3 - OPINION AND ORDER

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

record/report

the

to

-

register

volumes

and

for

carbon

the

Oregon

intensities

Program and
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

committee, the EQC adopted Phase 2 rules. Compl.
rules

require

standards.

regulated parties

Or.

Admin.

R.

to meet

the

second advisory
~~

35, 37. These

annual

340-253-0100-250,

clean

fuel

340-253·-0400,

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
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.
Page 4 - OPINION AND ORDER

340-253-8010-20.
OR-GREET,
National

a

The

carbon

intensity

of

a

fuel

is

based

on

lifecycle emissions model developed by the Argonne

Laboratory

340-253-0040 (44).

and

customized

for

Oregon.

Or.

Admin.

R.

The Oregon Program regulations include lookup

tables that list the carbon intensities of a variety of fuels.

4

Or.

Admin. R. 340-253-8030-40.
Beginning
credits

in

2016, 5

regulated

parties

will

equal to or greater than their deficits,

need

to

hold

on an annual

aggregate basis, to demonstrate their compliance with the Oregon
Program.

Or.

Admin.

R.

340-253-8010-20.

generated when fuel is produced,

A clean fuel credit is

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.

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
thermal-energy 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 bane, 740 F.3d 507 (9th Cir.), cert.
denied, 134 S.Ct. 2875, 134 S.Ct. 2884 (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.
Page 5 - OPINION AND ORDER

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 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-ofstate 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")

Reformulated Gasoline Rule

("RFGR");

and (4) is conflict preempted by section 211(o) of the CAA, which
contains the Renewable
Energy

6

Independence

and

Fuel Standard
Security Act

( "RFS")

as

("EISA") . 6

amended by the
In

June

2015,

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. D~c.
11, 2014); Am. Fuels & Petrochem. Mfrs. Ass'n v. Corey, 2015 WL
4872639 (E.D.Cal. Aug. 13, 2015).
Page 6 - OPINION AND ORDER

defendants and defendant-intervenors filed the present motions to
dismiss. 7
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

burden of establishing that such jurisdiction exists.

bears

the

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
necessary:

jurisdiction and

resolve

factual

disputes

where

"no presumptive truthfulness attaches to plaintiff's

allegations, and the existence of disputed material facts will not
preclude

the

[court]

from evaluating for

itself

jurisdictional claims." Kingman Reef Atoll' Invs.,

the merits
LLC v.

of

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.

7

State Intervenors also request judicial notice of certain
documents. State Intervenors' First Req. Judicial Notice Exs. AG; 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
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).
Page 7 - OPINION AND ORDER

12 (b) ( 6) . To survive a motion to dismiss, the complaint must allege
nenough facts to state a claim to relief that is plausible on its
face." Bell Atlantic Corp. v. Twombly,
For

the

purposes

of

a

Fed.

R.

550 U.S.

Civ.

P.

544, 570

12 (b) (6)

(2007).

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

nformulaic

recitation of the elements"

of a

claim nare

conclusory and not entitled to be assumed true." Ashcroft v. Iqbal,
556 U.S. 662, 680-81 (2009). Rather, to state a plausible claim for
relief,

the

complaint

nmust

contain

sufficient

allegations

of

underlying facts" to support its legal conclusions. Starr v. Bacca,
652 F.3d 1202, 1216, reh'g en bane denied, 659 F.3d 850 (9th Cir.
2011) .
Judgment on the pleadings is proper where nthe 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). nRule 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

internal quotations omitted).

Page 8 - OPINION AND ORDER

n.4

(9th

Cir.

2011)

(citation

and

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
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

Oregon,

economic

conduct

outside

the

borders

of

including the extraction, production and distribution of

transportation fuels." Compl.
The

occurring

Commerce

Clause

'!['![

"has

4, 107-19.
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

8

To the extent plaintiffs maintain that their allegations
are sufficient or plausible despite the actual text of the
relevant statues and regulations, or certain contradictory
judicialli noticeable facts, their argument is without merit.
Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000).
Page 9 - OPINION AND ORDER

of

Or . ,

511

U. S .

93

( 19 9 4 )

( 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

(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

(citation and internal

protectionism,
treatment

or

discrimination,

of in-state

quotations
"simply

omitted).
means

Economic

differential

and out-of-state economic interests

benefits the former and burdens the latter." Or. Waste Sys.,
U.S.

at

99.

If

a

statute

discriminates

against

that
511

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 (1986)

(citation and internal quotations

omitted). Absent discrimination, a law will be upheld "unless the
burden imposed on

[interstate]

Page 10 - OPINION AND ORDER

commerce is clearly excessive in

relation to the putative local benefits." Pike v.

Bruce Church,

Inc., 397 U.S. 137, 142 (1970). 9 "The party challenging the statute
bears the burden of showing discrimination." Black Star Farms, LLC
v. Oliver,
The

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

Court

at

the

outset,

plaintiffs'

that

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

Mountain,

or

effect

730

F. 3d

against
at

1107.

out-of-state
The

only

petroleum.
issue

Rocky

related

to

discrimination that falls outside Rocky Mountain is whether the
Oregon Program discriminates in purpose or effect against out-ofstate

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

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
ll, 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 i$ whether the Oregon
Program ·is discriminatory.
Page 11 - OPINION AND ORDER

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.
Initially,
petroleum

and

plaintiffs
ethanol

well-pleaded factual
Compl.;

Pls.'

Tracy,

519

Resp.

U.S.

discrimination
products,

as

companies

not

similarly

allegations
to Mots.;

278,

indeed

is

meaningfully
situated

address
cite

or

effect.

how
any

to

See generally

see also General Motors Corp.
310

a

(1997)

(when

[that]

"entities

there

55-59, 66-80).

to that

298-99,

involves
here,

are

are

do

~~

provide

threshold

similarly

the

alleged
different

question whether

situated

for

v.

the

constitutional

purposes"); Rbcky 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 increased GHG
output and rising world temperatures,

it cannot ignore the real

factors behind GHG emissions"); State Intervenors'
Dismiss 8-9

Reply to Mot.

(" [i] n the transportation fuel context,

traditionally

considered

ethanol

Page 12 - OPINION AND ORDER

to

compete

with

courts have
ethanol

and

petroleum to compete with petroleum")
to the extent they phrase

(collecting cases) . 10 Thus,

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 outof-state petroleum and Midwest ethanol,
Pls.'

Resp.

to Mots.

rejected this
relevant

12.

attempt

[competing]

at

on the other. See, e.g.,

The Ninth Circuit,

however,

"selective comparison,

expressly

which excludes

fuel pathways" and held that discrimination

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) .
Page 13 - OPINION AND ORDER

claims, whether premised on ethanol or petroleum, must be viewed
"in context of the full market." Rocky Mountain, 730 F.3d at 108890, 1099.
Like

the

LCFS,
because

discriminatory

the
it

Oregon

Program

distinguishes

is

among

not

facially

fuels

lifecycle GHG emissions, not origin or destination.

based

In fact,

on
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,
lowest

ethanol

carbon

intensity

730 F.3d at 1084, 1090
values,

providing

the

("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
market,

that

the fact

biofuels

and petroleum compete

that the Oregon Program assigns

in the

same

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
Page 14 - OPINION AND ORDER

reason:
[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
emissions-reduction 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,
reh'g denied,

439 U.S.

gasoline supply flows

884

(1978)

(because the state's "entire

in interstate commerce

local producers or refiners,

[as]

there are no

such claims of disparate treatment

between interstate and local commerce would be meri tless");

see

also

is

not

in-state

and

Rocky

Mountain,

7 30

F. 3d

at

108 9

facially discriminatory simply because

("a
it

regulation

af.fects

out-of-state interests unequally"). Under Rocky Mountain and Exxon
Corp .. , facial discrimination against out-of-state petroleum would
not transpire even if it were ultimately displaced by,biofuels in
the Oregon market because "successfully promot [ing]
Page 15 - OPINION AND ORDER

low-carbon-

'i

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

attributable to a default pathway." Rocky Mountain,

emissions

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 (1984); Hunt v. Wash. State Apple Adver. Comm'n, 432 U.S.
333

(1977);

(1988)).

New

Two

Energy Co.

of

these

of

cases

Ind.

v.

focused

Limbach,

486

primarily

on

U.S.

269

non-facial

discrimination. See, e.g., Bacchus, 468 U.S. at 268-73 (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 35052

(describing

instead

striking

Regardless,
liquor

the

the

excise

challenged

it

down

due

statute's
to

its

facial

neutrality

discriminatory

effect).

law invalidated in Bacchus limited the
tax

exemption

exclusively in-state.

Bacchus,

to

two

468 U.S.

and

state's

products

manufactured

at 265-66.

In contrast,

under the Oregon Program, both in-state 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

plaintiffs' petroleum-based discriminatory purpose claim).
Page 16 - OPINION AND ORDER

to

the

Hunt and New Energy are similarly distinct. Plaintiffs cite to
these cases for the proposition that an otherwise-unconstitutional
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-of-state

products. Hunt, 432 U.S. at 350-52; New Energy, 486 U.S. at 271-75;
see also Rocky Mountain, 730 F.3d. at 1092 (distinguishing Hunt in
relation to the plaintiffs'
claim).

Further,

ethanol-based facial discrimination

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

irrespective

of

all

investment

where

that

in

innovative

innovation

occurs.

fuel

production,

Defendants'

and

defendant-intervenors' 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.

made by state

71-84).

'!['![

lawmakers,

as well

Plaintiffs cite to statements
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
Page 17 -OPINION AND ORDER

ignore the actual stated purpose of the Oregon Program, which is to
~reduce

Oregon's

emissions

and

~reduc[ing]

contribution

the

impacts

to

of

the

the amount of lifecycle

levels

emissions

those

global

in

[GHG]

of

[GHG]

Oregon"

by

emissions per unit of

energy by a minimum of 10 percent below 2010 levels over a 10-year
period."

Or.

Admin.

R.

340-253-0000(1)-(3);

Mountain, 730 F.3d at 1098 (court

~will

see

also

Rocky

assume that the objectives

arti6ulated 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

(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 108990.

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

comments),

GHG

emissions.

with Defs.'

Compare

Reply to Mot.

Page 18 - OPINION AND ORDER

Compl.

<J[<J[

71-84

Dismiss Exs.

1-7

(excerpted
(comments

provided in context) .
that,

in

emissions,

In any event,

effectuating
the

Oregon

the

the hope of state officials

legitimate

Program

goal

benefits

the

of

lowering

local

GHG

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)

. legitimate state interests" and

(regulation that "advances .

"applies evenhandedly certainly passes muster under the commerce
clause"; the "predictable concern" from state politicians for their
own

residents

"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
benefits to in-state industries)

highlighting the LCFS'

(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
understood,

relate
in

to

a

context,

discriminatory
as

economic

design

defense

and
of

a

are

'easily

[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 (1981)). As discussed herein, any claim of a
protectionist purpose is belied by the fact that the Oregon Program
Page 19 - OPINION AND ORDER

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]

standard

requir [ing]

for

carbon

intensity values

regulated

intensity,

parties

and

to Oregon ethanol

to

comply

[assigning]

with

the

lower

carbon-

and other biofuels

than to

petroleum, and lower carbon-intensity values to Oregon ethanol than
to identical Midwest ethanol." Pls.'
Compl.

~~

Resp.

to Mots.

13

(citing

55-57 and quoting New Energy, 486 U.S. at 274) . 12

As a preliminary matter, plaintiffs' 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,

60 0 F. 3d at 12 32

(" [ c] ourts examining a

'practical

effect' challenge must be reluctant to invalidate a state statutory
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.
Page 20 - OPINION AND ORDER

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

"patent"

New

Energy,

such that

486

U.S.

an analysis

at

274-76

of the

effect was not necessary) .

As a

dismiss,

allege more

a

plaintiff must

commercial
inference

disadvantage,
that

the

such

challenged

statute's

result,

as

was

discriminatory

to survive a motion to
than the

facts

law

(discrimination

existence

creating

has

a

of

a

reasonable

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 Program "will
have the intended discriminatory effect" due to its discriminatory
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.
Compl.

<[<[

55-58

(gasoline

replace existing sources

and

"diesel

importers

[with fuels that have]

would

See

need to

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.
Page 21 - OPINION AND ORDER

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 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-of-state 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 outside Oregon." Pls.' Resp. to Mots.
19 (citing Compl. cn:cn: 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 (1989); World-Wide Volkswagen Corp. v. Woodson, 444
U.S. 286, 293 (1980). The extraterritoriality principle is rarely
utilized
Pag~

and

has

been

confined

22 - OPINION AND ORDER

to

three

circumstances:

price

control statutes,

statutes that lirik 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

necessarily contingent upon a

basis,

any

finding that

such

claim

the "Oregon Program

regulates and attempts to control conduct that occurs
states,"

as

both

"the

Commerce

is

Clause

[and]

in other

principles

of

structural federalism [exist to] prohibit states from engaging in
ext~aterritorial

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

plaintiffs'

"an

impermissible

extraterritorial

claim fails as a matter of law.

F.3d at 1103-07; see also Rocky Mountain II,
*13-14

(plaintiffs'

proposed

amendment

regulation,"

Rocky Mountain,

730

2014 WL 7004725 at

i.e.

to

add

a

claim

alleging that the LCFS was unconstitutional under "principles of
interstate federalism" - was barred by the law of the case doctrine
because, per plaintiffs 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
commerce in other States")
Page 23 - OPINION AND ORDER

[its]

borders,

or seek to control

(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'

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."
(2012)

Arizona

v.

United

States,

132

S.Ct.

2492,

2500-01

(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

(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
The

CAA

(1993).

authorizes

emissions. 42 U.S.C.

§

the

EPA

to

regulate

fuels

and

their

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

Page 24 - OPINION AND ORDER

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 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 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,

regulation, whereas subsection
negative

EPA

regulation.

(" [ s] ection 211 (c) ( 4)

( i)

See

applies

positive EPA

is preemption by affirmative-,

62

Fed.

only where

Reg.

10,690,

EPA has

10,693

affirmatively

decided to regulate a particular fuel characteristic or component,
or has affirmatively found that no such regulation is necessary").
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

reformulation of conventional gasoline." 42 U.S.C.
In 1994,

the EPA issued the RFGR,

through
§

the

7545 (k) (1) (A).

the purpose of which is "to

improve air quality by requiring that gasoline be reformulated to
Page 25 - OPINION AND ORDER

reduce

motor

vehicle

emissions

ozone-forming compounds,

of

toxic

and

tropospheric

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.
omitted) .

Specifically,

excluded

from

the

the

definition

Pls.' Resp. to Mots.
EPA

found

of VOC

that

on

the

23

(citations

"methane
basis

would

of

be

its

low

reactivity." 59 Fed. Reg. at 7722-23.
As such, the plain language of the RFGR did not affirmatively
find

that

Rather,

no

the

control
EPA

or prohibition of methane was

determined

only

that

methane

necessary.

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 ozone-forming VOCs should preempt nonidentical state regulation. See 59 Fed. Reg. at 7809 ("dissimilar
State [VOC] controls [are] preempted"). Because the RFGR's limited
discussion
affirmative,

of

methane

says

negative

nothing

regulation

about

the

pursuant

need

for

an

to

section

211 (c) (4) (A) (i), this fuel component is not covered under the CAA' s
Page 26 - OPINION AND ORDER

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,
Cir. 2003)
C.F.R.

§

Inc. v. Davis,

331 F.3d 665,

668-73

(9th

(citations and internal quotations omitted); see also 40

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,
components

EPA's decision to regulate

in reformulated gasoline]

determination that states

[certain fuel

areas did not encompass a

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,

pollutants.

the

states

retain

Exxon Mobil Corp.

1246, 1255 (9th Cir. 2000)
Moreover,

v.

authority

Envtl.

to

Prot.

(citing 42 U.S.C.

as State Intervenors observe,

§

regulate

Agency,

217

air
F. 3d

7416).
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

Page 27 - OPINION AND ORDER

[is]

necessary'

under

section

211 (c) (4) (A) (i),"
controls."
contains

57
no

with

Fed.
such

Reg.

the

"effect

47,849,

language

[being]

47,849.

concerning

to

preempt

In contrast,
methane,

or

state

the
any

RFGR
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

prohibition of methane
ignore

the possibility,

is

determination
necessary. 13

In

that

no

control

so

doing,

or

plaintiffs

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) ,
regulate that
Defendants'

fuel

thereby allowing states to

characteristic or component as

they choose.

and defendant-intervenors' motions are granted as to

plaintiffs' third claim.

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.
Page 28 - OPINION AND ORDER

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, 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

modified in 2007 by the EISA. 42 U.S.C.

forth
§

the

RFS,

which

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 th~ case of any such renewable
Page 29 - OPINION AND ORDER

was

fuel
produced
from
new
facilities
that
commence
construction after December 19, 2007, achieves at least
a 20 percent reduction in lifecycle greenhouse gas
emissions compared to baseline lifecycle greenhouse gas
emissions.
42 U.S.C. § 7545(o) (2) (A) (i) . 14
As a threshold matter, plaintiffs' 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.
<JI<JI

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

consolidated

one

of

the

Rocky

Mountain

omitted). Given these pleading deficiencies,
plaintiffs'

cases")

(citations

in conjunction with

failure to point to any additional facts that might

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.
<JI<JI 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.
Page 30 - OPINION AND ORDER

confer subject-matter jurisdiction, the Court concludes that the
fourth claim is premised on the rights of non -partes those

who

produce

qualifying

renewable

fuels

in

namely,

facilities

constructed pre-December 2007. See Allen v. Wright, 468 U.S. 737,
7 51

( 198 4)

prudential

(the court lacks subject-matter jurisdiction,
limitations,

where

a

plaintiff

"rais[es]

due to
another

person's legal rights"); see also Elk Grove Unified School Dist. v.
Newdow, 542 U.S. 1, 15 n.7 (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,

allegations are implausible in four respects.
maintain "that Section 2ll(o)

plaintiffs'

First,

plaintiffs

was enacted to ensure a continued

market for ethanol from existing ethanol plants." Pls.i

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 then-existing facilities,
Congress elected to exempt such facilities
that

certain

fuels

achieve

a

20%

the fact that

from the requirement

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
Page 31 - OPINION AND ORDER

amount that must be met with corn ethanol generally, let alone from
corn ethanol produced in facilities constructed before December
2007;

this

renewable
2011.

statute

fuel

42

simply

articulates

applicable

volumes

of

required for the calendar years of 2006 through

u.s.c.

7545 (o) (1) (B) (i)

§

7545 (o) (2) (B);

("advanced

see

biofuel,"

42

also

the

use

u.s.c.

of

which

§

is

encouraged under the RFS, "means 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)
U.S.C. § 7545(o) (2) (A) (iii)
issue

is not implicated.

See 42

(speaking only to the EPA's ability to

"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.

15

G,

at

6-7 15 ;

see also id.

at

Because State Intervenors did not numeralize their
exhibits, the Court refers to the page numbers assigned in the
docket.
Page 32 - OPINION AND ORDER

4

("these [RFS] thresholds do not constitute a specific control on
[GHGs]

for

transportation

standard)").

In fact,

fuels

(such

as

a

low

carbon

fuel

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)
shall

be

construed

environmentally

as

superseding,

protective

requirement

or

of the [CAA]

limiting,

under

any
any

more
other

provision of State 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,

Oregon Program. See Nat'l Audubon Soc'y,

307 F.3d

835,

854

(9th Cir.

2002)

16

(as

amended)

Inc. v.
(where a

Davis,

savings

and

clause

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.
Page 33 - OPINION AND ORDER

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.), cert. denied, 549 U.S. 953 (2006)

(distinguishing Geier v.

Am. Honda Motor Co., Inc., 529 U.S. 861 (2000), and other conflict

preemption

cases,

which

preemption

provisions

statutes,"

from

one

involved

and

"inconsistent

savings

in which

"an

clauses

and conflicting

within

express

the

federal

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

Oregon."

these

Pls.'

plants

Resp.

to

"[un]able
Mots.

30.

to

export

Aside

their

from

the

fuels
fact

to

that

plaintiffs' complaint is silent as to the carbon intensities of the
ethanols

generated

from

Midwestern producers

these

have

unspecified,

obtained

some

of

exempted
the most

plants,
favorable

treatment under the Oregon Program.
Fourth,
opposing

the

compliance

dismissal

do

importation of fuels

not

scenarios

cited

"predic[t]

by

Oregon's

plaintiffs
ending

in
its

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

Page 34 - OPINION AND ORDER

Intervenors'

Second Req.

Judicial

Notice Ex.

I, at 3 (compliance scenarios "should not be confused

with IFC market forecasts")
fuel

availability,

Rather, ongoing·market conditions and

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,
higher-carbon

corn

ethanol

these scenarios show conventional,

from

the

Midwest

being

Oregon's market by other types of corn ethanol,

replaced in

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 be achieved
exclusively through purchasing credits, plaintiffs' conclusion that
the Oregon
ethanol

is

Defendants'

Program will
not

shutter the

entitled

to

the

state's market

presumption

of

to Midwest

truthfulness.

and defendant-intervenors' motions are granted as to

plaintiffs' fourth claim.

Page 35 - OPINION AND ORDER

CONCLUSION
State

Intervenors'

notice . (docs.
(doc.

51),

53,

State

Conservation

68)

first

and

second requests

for

judicial

are GRANTED .. Defendants' motion to dismiss

Intervenors'

Intervenors'

motion to dismiss

motion

for

judgment

on

(doc.
the

52),

and

pleadings

(doc. 54) are also GRANTED. Accordingly, the parties' requests for
oral argument are DENIED as unnecessary. This case is DISMISSED.
IT IS SO
Dated

ORDER~

thisCt~day

of September 2015.

Ann Aiken
United States District Judge

Page 36 - OPINION AND ORDER