science environment

As Cap And Trade Moves Forward, Oregon Lawmakers Consider Constitutional Tweak

By Dirk VanderHart (OPB)
Salem, Ore. May 20, 2019 10 p.m.

As a contentious proposal to enact a cap-and-trade program in Oregon moves forward, one criticism of the policy has grown louder: Most of the money generated couldn't be used to encourage zero-emissions vehicles.

In a state where cars and trucks account for a major portion of greenhouse gas output, an expanding chorus of lawmakers sees that as a problem. Now one state senator wants voters to fix it.


State Sen. Lee Beyer, D-Springfield, says he’ll introduce a bill this week asking Oregonians to tweak the state’s constitution. If lawmakers pass the bill and voters agree, hundreds of millions of dollars that might currently be restricted under cap and trade could be used on rebates for electric vehicles, helping public transit and freight interests switch to lower-emissions options and more.

Related: What Oregon's Cap-And-Trade Legislation Can’t Buy

“If you look at the issue of what we’re trying to do with cap-and-trade, it is to reduce emissions,” Beyer said Monday. “Most of those emission are from vehicles, and most of those from passenger and lightweight vehicles.”

Under a provision voters put into the state constitution in 1980, any money raised by fuels taxes goes into a State Highway Fund. The money has to be spent “exclusively for the construction, reconstruction, improvement, repair, maintenance, operation and use of public highways, roads, streets and roadside rest areas …”

Those rules have an outsize impact on the cap-and-trade proposal, an effort to fight climate change that would require the state's largest polluters to purchase credits for each ton of greenhouse gas they emit. Because the legislation offers a range of carve-outs for power companies, natural gas and many industrial facilities, the proposal in its current form would derive nearly two-thirds of its revenue — around $350 million a year — from fuel distributors.

The cap-and-trade legislation, House Bill 2020, passed out of the Joint Carbon Reduction Committee on a party-line vote last week and is currently before the Legislature's budget committee.

Beyer declined to share language from his forthcoming bill but told OPB that it would only concern money derived from cap and trade. Money generated from Oregon’s gas tax that currently flows to the highway fund wouldn’t be impacted at all by the proposal. The question would appear on the November 2020 ballot.

Supporters of the cap-and-trade bill have said that, even under constitutional limitations, money from fuel could fund useful initiatives. The Oregon Department of Transportation, which administers the highway fund, has said lanes for buses or bikes could be built with the money, helping Oregonians cut down on pollution. ODOT has also said the money would be eligible for highway-widening projects, replacing culverts and more.


"Constraint is always difficult, but at the same time, I will say that the constitutional restriction makes us more creative," state Sen. Michael Dembrow, D-Portland, a key architect of the cap-and-trade proposal, told OPB earlier this year.

Related: Report: Economic Benefits Of Cap And Trade Will Outweigh The Costs In Oregon

But Dembrow says he also supports putting money toward subsidizing the purchase of vehicles that run on electricity or hydrogen, as California and Quebec have done extensively with their own cap-and-trade programs. Oregon currently offers rebates of up to $2,500 to residents who purchase electric cars.

“I’m conceptually very supportive of it,” Dembrow said Monday about Beyer’s proposal. He added there’s also a chance that the Oregon Supreme Court could rule cap-and-trade revenues aren’t restricted under the state constitution if the program passes into law and faces a court challenge.

“For me the key is just getting clarity,” he said.

While the cap-and-trade proposal has caused no shortage of partisan rancor, the notion of amending the constitution is potentially bipartisan. Sen. Cliff Bentz, R-Ontario, a key critic of cap and trade, has said he would back a change if its wording is “exactly right.” Bentz is concerned with helping Oregonians avoid increases to gas prices expected under cap and trade.

Under current law, most cap-and-trade revenue “could not be used to help protect people from the ever-increasing cost of fuel,” Bentz said.

Lawmakers are already grappling with how to address increased fuel costs, which could increase more than 15 cents per gallon if a cap-and-trade policy passes into law. A bill that would offer tax credits to lower-income households for gas purchases is currently before the House Revenue Committee.

There are also existing proposals to help Oregon reduce vehicle emissions. House Speaker Tina Kotek, for example, recently proposed diverting roughly $750 million from the "kicker" tax refund expected to go back to voters next year. Under her plan, nearly $500 million of that money would be spent building infrastructure for zero-emissions vehicles and helping freight haulers transition to cleaner-burning diesel engines.

Beyer said Monday he’s spoken with other lawmakers about his idea but has not bothered to tabulate support yet.

"I just actually kind of did it," he said, noting that he's spoken about the matter with AAA Oregon/Idaho, a key stakeholder that has fought to safeguard constitutional restrictions on gas tax money. A spokeswoman for the organization said Monday it had been involved in the process.

The Oregon Trucking Association, another potential opponent of the proposal, did not immediately respond to an inquiry.

This story has been updated to more accurately reflect the sources of carbon emissions in Oregon.