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Oregon begins rulemaking process to reinstate emissions trading system

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On 2 April 2024, Oregon’s Department of Environmental Quality (DEQ) held its first public advisory committee meeting to reinstate the Climate Protection Program (CPP) after its invalidation due to a ruling by the Oregon Court of Appeals.

The CPP was initially launched in 2022 to establish a declining cap on regulated emissions for covered entities, including natural gas utilities and non-natural gas fuel suppliers. In December 2023, the Oregon Court of Appeals found the rulemaking process for the CPP non-compliant with disclosure obligations under Oregon Law. The court determined that the government failed to provide appropriate notice that the rules would impose additional requirements on large stationary sources holding permits under the federal Clean Air Act. The court's decision rendered the CPP and all its associated requirements invalid.

In response, the DEQ has embarked on a one-year rulemaking journey to rectify these procedural oversights and reestablish the scheme. It established a rulemaking advisory committee, including stakeholders and interested parties, to define the procedural framework for the new rulemaking process. 

The objectives for the rulemaking process include:

  • Reestablishing a program to regulate greenhouse gas emissions from significant sources in Oregon, encompassing large stationary sources, transportation fuels, and other liquid and gaseous fuels.
  • Establishing an enforceable and diminishing cap on greenhouse gas emissions from fossil fuels used in Oregon, such as diesel, gasoline, natural gas, and propane, starting in 2025.
  • Prioritizing equity by advancing benefits and mitigating burdens for environmental justice communities.
  • Reinstating a climate program with a scope and emissions reduction ambitions akin to the previously adopted Climate Protection Program.

In early April 2024, the DEQ convened the rulemaking advisory committee for the first time to prepare draft regulations open for public consultation. Discussions focused on establishing a revised emissions cap and refining the parameters of regulated entities. The DEQ has scheduled subsequent meetings for 14 May and 25 June 2024. Following these meetings, the DEQ will formulate final rules for review by the Environmental Quality Commission (EQC), responsible for the adoption and enforcement of the CPP. The new program is scheduled to come into force in 2025.

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