Update: Gov. Kate Brown on Thursday called for the repeal of Oregon’s clean fuels law and the passage of a transportation package to be considered separately. See below.

Oregon lawmakers are considering a $343.5 million transportation package that would raise the gas tax and pay for a lot of highway and transit projects. It would also repeal the clean fuels requirement signed into law this year. Here are five things to know about the clean fuels portion of this proposal:

1. The stage was set before the clean fuels bill passed:

Back in March, before the Oregon House and Senate approved the clean fuels bill, Republicans pulled out of negotiations over the transportation package, citing their reservations about the clean fuel requirements. Many argued the requirements to reduce the carbon intensity of transportation fuel by 10 percent over 10 years amounted to a hidden gas tax that would raise the cost of fuel. That set the stage for the recent negotiations among the “gang of eight” and made repealing the clean fuels bill a prerequisite to getting bipartisan support for the transportation package.

2. There’s a new plan for reducing carbon emissions – and it’s controversial, too:

Several sections of the 73-page transportation package propose alternative ways to reduce carbon emissions from transportation. They include using an existing biofuel blending program to cut carbon emissions from fuel by 5 percent over 10 years, as long as the biofuel is “commercially available, technologically feasible and cost effective.”

That language raised a red flag for environmentalists, who recognized it from proposed ballot initiatives backed by the Oregon Fuels Association. Oregon Environmental Council Director Andrea Durbin skewered the proposal, saying it put lawmakers in the position of “carrying the oil industry’s agenda.”

Another piece of the plan involves diverting 17 percent of the public purpose charge to reimburse utilities for electric vehicle infrastructure. The public purpose charge is an existing tax on utility ratepayers, and most of it normally goes toward energy efficiency and renewable energy projects. The Oregon Citizens Utility Board has opposed this idea, and Durbin called it “moving the deck chairs around” without adding any new pollution reductions.
Lawmakers supporting the deal say altogether, the alternative programs – which also include public spending on compress natural gas, school bus conversions, transit and more efficient traffic flow – will add up to more reductions in carbon emissions than the state would have gotten from the clean fuels program. In the first hearing on the deal Wednesday, Sen. Betsy Johnson, D-Scapoose, one of the lawmakers who drafted the deal, said the estimates of how much carbon would be reduced through these measures came from reliable, “neutral” modelers who work for state agencies.

3. The oil industry likes it:

At a hearing Wednesday, representatives from the Oregon Fuels Association and the Western States Petroleum Association spoke in favor of the deal and thanked lawmakers for their efforts to develop the proposal.

Paul Romain, lobbyist forthe Oregon Fuels Association, said his group is happy to blend biofuels into gasoline and diesel as long as they’re available at a reasonable price. But it doesn’t support having to pay extra if low-carbon fuel is too hard to come by.

“To basically punish us when through no fault of our own the fuel isn’t available is not really appropriate,” he said. “So that’s the portion we’ve always objected to. We think this program is a way to get good carbon reduction in this state, and it’s not in effect a hidden tax.”

4. It could derail a West Coast climate agreement:

A couple years ago, the governors of Oregon, Washington, California and British Columbia all agreed to develop low-carbon fuel standards in their jurisdictions as part of a pact to reduce carbon emissions coastwide. California and BC already have programs in place to reduce the carbon intensity of fuels over time.

Washington is studying the idea; Oregon’s program has been years in the making. The clean fuels bill that passed this session would launch the requirements in 2016. Supporters say repealing the program would be a setback for the whole region. Washington’s nascent program is facing a similar challenge – also from a transportation bill making its way through the Legislature this session. A provision in the bill would prevent Gov. Jay Inslee from implementing a low-carbon fuel standard to reduce greenhouse gas emissions. The bill is stalled while budget talks continue.

5. It has a ways to go in a short period of time:

The Oregon legislative session is set to wrap up by July 11 and the new transportation package just had its first hearing Wednesday in a Senate committee. The details of the new deal were released to lawmakers Tuesday night and it’s unclear whether the bill has the support it needs to pass in the House and the Senate. Because it involves tax increases, the bill will need a three-fifths majority to pass.

Last week, 19 House Democrats sent a letter to Gov. Kate Brown saying they wouldn’t vote for a transportation deal that repealed the clean fuels bill. Sen. Michael Dembrow, D-Portland, wrote in a recent note that some senators were prepared to make a similar statement. It will be tough for lawmakers who supported the clean fuels bill to fully vet the proposal, he wrote, with so few days left in the session.

On Thursday, Gov. Brown released a statement saying there won’t be enough time to get the bill through the Legislature.

“Given the complexity of the issues and the remaining time available, there simply isn’t a path forward through both chambers for a proposal that accomplishes both this session,” she said.

She also said the transportation funding and carbon emission reductions “should be decoupled and considered separately, thus avoiding the ‘my way, or no highway’ situation in which we now find ourselves.”