The Secretary of State’s Office recently released a summary of lessons learned from Oregon’s disastrous Business Energy Tax Credit program. Thanks to a combination of lax oversight, complex and easily manipulated rules, even illegal activity, the well-intended environmental effort cost taxpayers millions upon millions of dollars before the Legislature finally pulled the plug on it.
One lesson lawmakers and state officials have yet to learn, unfortunately, involves the importance of transparency in ensuring accountability. Given the central role the state’s newspapers played in exposing some of the BETC program’s worst abuses, you’d think lawmakers would make similar programs easy for reporters, or any member of the public, to scrutinize. Sunshine, as they say, is a powerful disinfectant.
Instead, the state on Thursday refused to share crucial information about a relatively new, expensive and even more complex state program. Call it Baby BETC.
Better known as the Clean Fuels Program, Baby BETC is designed to reduce the “carbon intensity” of Oregon’s motor fuels by 10 percent between 2015 and 2025. Lawmakers passed the underlying legislation back in 2009, but the program wasn’t fully implemented until the beginning of 2016, thanks in large part to its bewildering complexity.
Carbon intensity, the heart of the program, is a measure not only of the global-warming gases produced by a fuel’s consumption, but also of those released during its production, transportation and storage. Thus, two gallons of gasoline, ethanol or whatever may have different carbon intensities depending upon their heritage.
The law gradually reduces the acceptable carbon intensity of road fuels. As it does, importers of the fossil fuels most of us put in our cars and trucks will find themselves increasingly on the wrong side of the state’s global warming ledger. To maintain compliance with the clean fuels law, they’ll have to buy more and more credits generated by businesses and other entities that produce and sell low-carbon fuels, most notably electricity. The cost of buying the credits is passed along at the pump.
This is, of course, a gas and diesel tax by another name. Instead of using the proceeds to pay for roads, though, Baby BETC transfers the money to low carbon-fuels industries and other “credit generators,” including public transit districts and even state agencies such as the Department of Administrative Services.
Since 2016, more than $17 million worth of credits have been sold through the fuels program, which means that Oregon’s gas and diesel users have overpaid a like amount at the pump in order to subsidize low-carbon fuels. The state Department of Environmental Quality’s website features a rolling tally of credits sold, and for what price.
What it doesn’t tell you, importantly, is which companies bought the credits, and in what amount, and which sold them, thereby hoovering up a sizable government subsidy. When we asked DEQ to provide that missing information, the department refused, arguing that the information is exempt from public disclosure. The reason for the secrecy? Telling taxpayers whom they’re subsidizing and to what degree might reveal “trade secrets” of the entities involved.
Let’s get this straight. Oregon’s BETC program scandalously distributed millions of public dollars by means of a complex and laxly managed credit scheme. Now, Baby BETC is distributing millions of dollars by means of a complex credit scheme whose workings are deliberately hidden from the public. What could go wrong?
Particularly absurd is the application of trade-secrets protection to government entities that might be selling clean-fuels credits. How on earth can public bodies, which are supposed to operate in the open, hide their wheeling and dealing with taxpayer money as a “trade secret?” Dana Huddleston, DEQ’s public record requests coordinator, said she didn’t know. We wish we could say we were surprised.
Did lawmakers really intend the law to prohibit the sharing of this information, as DEQ officials suggest?
That’s a question legislators should answer during next year’s session. If lawmakers value transparency, as they should, they should amend the law to require the sharing of complete credit-transaction information. In fact, they should insist that such information be posted on DEQ’s website in an easy-to-use fashion.
If, on the other hand, lawmakers do intend to hide subsidy transactions completely from the people providing the subsidies, they should have the courage to say so. They also should explain to taxpayers why Oregon, especially in the wake of the BETC disaster, should tolerate a subsidy scheme whose operation requires secrecy.
It will be useful to have their views on the record if Baby BETC grows up to resemble Big BETC, as history suggests that it will.