By Taylor W. Anderson

The Bulletin

SALEM — As lawmakers calm down after a failed high-wire attempt to repeal an environmental law to make way for a gas tax hike and road funding, new details are emerging that outline the clandestine work group that undertook the session’s most ambitious and politically divisive issue .

Some questions still linger over the derailment, like why Oregon Department of Transportation Director Matthew Garrett admitted deep in the first public hearing on a proposed deal that the math the lawmakers relied upon was wrong all along, an admission that led a leading Republican to ask for Garrett’s resignation.

But other details and interviews with lawmakers on the so-called Gang of Eight no longer sworn to secrecy give a fuller picture of an attempt at compromise that hardly ever stood a chance at passing, given political realities in the statehouse, how late it was in the session when Gov. Kate Brown started the effort, and decisions along the way that made the closely watched yet elusive work fall through in the end.

Democrats teed up what would become the session’s largest post-John Kitzhaber drama on the opening day of the session, when they announced they would use their power in numbers to approve a low-carbon fuel standard that seeks to curb emissions from transportation in Oregon. It was strongly opposed by Republicans.

While a bipartisan group had started the tedious work of refining a barrage of transportation needs into the first roads package since 2009, Democrats approved the low-carbon fuel standard a month into the session, and Republicans left the table, promising to withhold support for the higher taxes and fees needed to pay for roads.

“(Democrats) came off and said ‘We have unfinished business,’ and they rammed that through and they rammed all this other stuff through and then they turn around and say ‘OK, let’s work together now,’” said House Republican Leader Mike McLane, of Powell Butte.

Midway through the session, Brown and legislative leaders secretly pulled together the Gang of Eight lawmakers and tasked them with finding a way past the blockage. In the end, the effort went down .

No longer bound by a pact of secrecy, lawmakers are now speaking for the first time publicly about the attempt, and new details highlight just how far lawmakers always were from success.

Oil industry involvement

While the Gang of Eight worked in private and almost exclusively with Brown policy advisers, lobbyists for the oil industry who oppose the low-carbon fuel standard were kept up-to-date and even outlined part of the new package that would have repealed and replaced the standard.

Because the standard aims for a 7.7-million ton reduction of greenhouse gas pollution in 10 years, lawmakers agreed that was the minimum target they’d need to reach to try to swap the program for new carbon cuts and road funding.

Internal documents from the group show a large piece of the proposed carbon-cutting scheme was associated with three prominent oil and industry lobbyists: Paul Romain, Bob Russell and Brian Doherty.

The so-called “Doherty/Russell/Romain concept” came largely from the framework of two proposed ballot measures to water down or repeal the standard filed on May 20, a week after The Bulletin first reported Brown had pulled leaders together to try to salvage a bipartisan transportation deal.

The work group used the ballot measure largely as a blueprint that would cut carbon emissions through blending biofuel “as long as the fuel is commercially available, technologically feasible, and cost effective.”

“Look, if (biofuels are) available and practical and not priced out of this world, then we’ll use it, it’s fine. But you have to keep those parameters,” Romain said, adding the common belief that the low-carbon fuel standard may lead to higher gas prices.

Along with cleaner fuel blends, the state would have funded ambitious transit projects, partially subsidized an electric vehicle market and infrastructure, and funded other programs that together sought to reduce 8.82-9.82 million tons of carbon emissions over a decade, a number that was later lowered and remains disputed by environmental groups that question the math and by some Republicans who say it could have been higher.

While environmental groups were kept from the secret meetings, it wasn’t hard for them to guess what the Gang of Eight — six of whom voted against the low-carbon fuel standard in February and March — would do to the standard while working behind closed doors.

“I think you really saw the length to which the oil industry would go here in this process,” said Doug Moore, executive director of the Oregon League of Conservation Voters. “They were literally stopping at nothing to take away this great law that protects our clean air to benefit their own bottom line.”

House breakdown

Interviews with all members of the work group except the House Democrats who said they were unable to talk point to a progressive House Democratic caucus allied strongly with the environmental groups pushing the low-carbon fuel standard as a key factor in the breakdown, along with the rushed nature of the effort in the final six weeks of session.

The work group included top Brown advisers, as well as the eight lawmakers: Democrats Sen. Betsy Johnson of Scappoose; Sen. Lee Beyer of Eugene; Rep. Jessica Vega Pederson of Portland; Rep. Caddy McKeown of Coos Bay; and Republicans Sen. Jeff Kruse of Roseburg; Sen. Doug Whitsett of Klamath Falls; Rep. John Davis of Wilsonville; and Rep. Cliff Bentz of Ontario.

They met more than a dozen times, and all eight members signed a June 9 outline of the package detailing the replacement of the low-carbon fuel standard “contingent upon getting a transportation package.”

After signing the pact, they released details outside the room, to caucus members anxious to hear about the deal and to the interest groups and lobbyists representing environmental groups and the oil industry.

That, Bentz and others said, is when the effort began to quickly crumble in public view. The Gang of Eight stopped meeting after all lawmakers were briefed on the package, and the framework began to slide to its eventual demise within about a week.

“One would have to ask why did the wheels begin to fall off? The answer would be that there were many House Democrats that had no enthusiasm with going forward with a repeal of the low-carbon fuel standard if it wasn’t supported by the environmental interests,” Bentz said.

Nineteen House Democrats sent a letter to Brown on June 17 saying they wouldn’t support the effort. Two days later, Vega Pederson added her name to the list of Democrats who wouldn’t support the effort, saying in a Facebook post the agreement “was contingent on elements that were never resolved.”

“I think that without opposition on the House side we probably could’ve gotten 18 (votes) in the Senate,” Beyer said, referring to the number of votes needed to raise Oregon’s gas tax 4 cents.

An aide for Vega Pederson said the lawmaker couldn’t talk for the story. McKeown declined through her chief of staff to requests for comment.

But Moore, with the Oregon League of Conservation Voters, sums up why those who support the ambitious low-carbon fuel law opposed the new framework:

“They weren’t creating a new program. They were figuring out how they could placate the oil industry to get a deal on the back of clean air,” Moore said.

The Senate pushed on for another week, but it became abundantly clear that even if leaders could muster 18 votes in the Senate from the law’s allies and conservatives wary of voting to raise the gas tax, the House was unlikely to go along.

ODOT mistake

On June 24, with just over three weeks left before lawmakers were required to finish their work, the Senate brought together a special committee to unveil what the Gang of Eight had worked on.

On the committee were four lawmakers who opposed the low-carbon fuel standard and two — Sens. Chris Edwards, D-Eugene, and Elizabeth Steiner Hayward, D-Beaverton — who supported it.

Two hours into the hearing, after supporters spoke in resounding opposition to the framework, ODOT Director Garrett dropped what Whitsett called “a bombshell.”

Instead of 8.82-9.82 million tons reduced through the subsidies, new blending and transit, the framework might reduce 7.23-8.23 million tons over a decade.

“I’m not sure where the mistake took place, but I can assure you that the confidence level both for the (other numbers) now are very high,” Garrett said.

Given the amount of carbon Oregon drivers will emit in the coming decade, the mistake was actually minuscule and would have shaved only a small fraction of pollution from drivers over the coming decade. But it was a public hiccup in an unveiling that onlookers said needed to go smoothly to even have a shot at passing the Senate.

Hours after Garrett aired the mistake, Brown called Senate President Peter Courtney and told him she would pull the plug on the effort the next day.

The low-carbon fuel standard would remain the law in Oregon, and the state would likely go at least two more years before addressing a major backlog of road maintenance needs.

Lawmakers are now circling around the surprise error to either defend as an honest mistake or question whether it was intentional.

“People have asked me whether or not I believe that this was malicious, and I think it was not,” Johnson said in an interview, citing the rapid pace at which the work group was moving. “Different people were asking for modeling runs based on different input, based on different assumptions across agencies, across branches of government. Common sense would suggest that there was room for error.”

Others from both parties in the Gang of Eight have defended Garrett and ODOT, but tension has remained primarily among Senate Republicans.

Kruse said, minutes after Courtney announced the effort was dead, he thought the mistake was intentional because the deal would have required ODOT to find $300 million of savings that could be used for road maintenance over six years.

“I think there was quite honestly a design by the low-carbon fuel standard folks to blow the thing up, and they did,” Kruse said.

Garrett wasn’t available for an interview last week.

ODOT Assistant Director Travis Brouwer said outdated information led to the wrong estimate that lawmakers unveiled in the hearing. ODOT workers discovered the mistake while double-checking the math the morning of the public hearing, he said.

Brouwer told The Bulletin the day after the hearing ODOT knew about the mistake “hours before the hearing,” which would have been enough time to alert the committee and essentially soften the impact of the changing numbers.

Senate Minority Leader Ted Ferrioli was so upset at the way the mistake was presented that he’s asked Brown to request Garrett’s resignation, Senate Republican caucus administrator Paul Rainey said.

Ballot measure

Most lawmakers aren’t pretending there’s a logical path to remedying the issue before 2017, and all eyes are turning to a likely ballot measure proposing a repeal in 2016 of the low-carbon standard as a potential final battle over the law.

“The idea here that (Republicans are) just going to make this their Affordable Care Act and (they’re) going to repeal it or else, well, that’s just bad actors right there,” Moore said, referring to national Republicans’ countless unsuccessful efforts to repeal President Barack Obama’s landmark health care law. “You’re going to put yourself where you’re an eternal minority. Or a generational minority.”

Oil companies are already sounding the alarm over the low-carbon fuel standard, which by most accounts will eventually lead to higher fuel prices after it’s fully in place, though experts say the program’s impact on fuel prices is difficult to predict.

If the petitions filed May 20 make the ballot, the debate will likely be cast as it played out throughout the session with a focus on the potential cost of gas for the clean air program.

“We’re basically looking at a scenario where, all right we don’t have a gas tax increase, price of fuel is going to go up (and) companies could have to make a determination,” said Romain, the oil lobbyist. “If it’s going to go up 50 cents or a buck or whatever it is, is it worth fighting it?”

— Reporter: 406-589-4347,

tanderson@bendbulletin.com

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