American Fuel & Petrochemical Manufacturers v. O’Keeffe

The federal district court for the District of Oregon dismissed a challenge to an Oregon law and its implementing regulations that establish a low carbon transportation fuel mandate. The law requires a 10% decrease over 10 years in lifecycle greenhouse gas emissions from transportation fuels produced in or imported to Oregon. The court noted that the plaintiffs’ dormant Commerce Clause discrimination claims were “largely barred by on-point precedent”—the 2013 decision Rocky Mountain Farmers Union v. Corey, in which the Ninth Circuit rejected dormant Commerce Clause claims against California’s low carbon fuel standard. The Oregon district court nonetheless addressed the discrimination claims and found that the plaintiffs had not stated claims that the Oregon low carbon fuel mandate would facially discriminate or that it would discriminate in purpose or effect against out-of-state fuels. The court also dismissed the claim that the Oregon law was extraterritorial regulation, rejecting plaintiffs’ argument that their claim was different from the unsuccessful extraterritoriality claim in Rocky Mountain Farmers Union because it was independently based on principles of interstate federalism, not just on the dormant Commerce Clause. The court also said that neither the Clean Air Act nor EPA’s Reformulated Gasoline Rule expressly preempted the Oregon law. The court dismissed a conflict preemption claim as well, finding both that plaintiffs did not have prudential standing since they did not intend to produce or sell the type of fuel they alleged the Oregon law would bar and also that the allegations of conflicts with federal programs were implausible.

Three trade associations—American Fuel & Petrochemical Manufacturers, American Trucking Association, and Consumer Energy Alliance—filed a lawsuit in federal court in Oregon to enjoin the state’s Clean Fuels Program. The plaintiffs claimed that the program, which requires reductions in the carbon intensity of fuels produced in or imported into the state, violates the U.S. Constitution’s Commerce Clause because it discriminates against transportation fuels imported into Oregon and attempts to regulate economic activities such as extraction, production, and distribution of transportation fuels that occur outside Oregon’s borders. The plaintiffs contended that the regulation of economic conduct outside the state also violates “principles of interstate federalism embodied in the federal structure of the United States Constitution.” The three organizations also claimed that the Clean Fuels Program violates the Supremacy Clause because it is preempted by federal laws, including the Clean Air Act, the Energy Policy Act of 2005, the Energy Independence and Security Act of 2007, and the federal Renewable Fuels Standard.