Earlier this month, the Department of Environmental Quality refused to release information that would shed light on Oregon’s complex and secretive Clean Fuels Program, which imposes a de facto tax on gas and diesel fuel in order to subsidize the alternative-fuel industry. We appealed the denial to the state Department of Justice, which, unlike DEQ, at least seems to be giving the matter serious consideration.
In denying our records request, DEQ argued that the information we seek involves trade secrets and, thus, is conditionally exempt from disclosure. The information may be released only if the public interest argues for transparency. The DOJ asked us to make such an argument, which we were happy to do. And to that end, it asked us to respond to counterarguments provided by a handful of businesses last year following a similar records request.
The position taken by affected industries, in brief, is as follows: To help the public, we must hide from the public. Let’s hope the DOJ doesn’t endorse this view.
The Clean Fuels Program is designed to reduce the carbon emissions produced by the state’s transportation fuels, and the information we’re seeking will show where the rubber meets the road, so to speak. The program, which went into effect fully in 2016, applies pressure to fuel providers by ratcheting down so-called carbon intensity by 10 percent over about a decade. Carbon intensity is a measure of the global-warming gases produced during a fuel’s entire life cycle, which includes its production, transportation, storage and use. Simple, no?
The importers of the gas and diesel most of us use lower the carbon intensity of their fuel by blending it with low-carbon renewables such as ethanol. Because fuel-blending has limits, even the most determined fossil-fuel importers will fail to meet the Clean Fuels Program’s carbon-reduction requirements with blending alone. At that point, they’ll generate deficits they may eliminate by buying credits sold by alternative-fuels businesses. The cost of this subsidy is reflected in the price of fuel at the pump.
About $17.5 million worth of credits have changed hands since 2016. But most of this sum — more than $13 million — moved through the subsidy spigot the first eight months of this year. The pace is accelerating.
But who’s getting all that money? Which companies are buying and selling credits, we asked DEQ, and for how much?
DEQ refused to say. The number and price of credits bought and sold by individual businesses is proprietary information, the state maintains, and thus conditionally exempt from public disclosure. The public may see which companies are registered under the program as credit generators and, thus, eligible to sell credits. But the list contains more than 40 entities and even includes cities (Portland), public transit districts (TriMet) and government agencies (Department of Administrative Services). There’s no way to know which of these entities are actually receiving subsidies and how much they’re getting.
Secrecy is essential, several businesses told DEQ last year, because disclosing credit-transaction information could disrupt the credit market to some degree. One company registered as a credit generator, Washington-based Waste Management Renewable Energy, even predicted breathlessly that divulging detailed credit-sale information could sink the Clean Fuels Program.
Maybe, maybe not.
Another potential consequence of transparency — one not mentioned by any of the participating businesses— is that the program would endure, with transparency-averse subsidy seekers bowing out and less secretive businesses taking their places. Nobody’s forcing them to seek public subsidies, and transparency ought to be a condition of participation. The fossil-fuel distributors compelled to buy credits might not like transparency either, but does anyone really think a little sunshine would scare them away?
In any case, adverse consequences are worth risking. Without transparency, the people footing the bill for the program can’t see which businesses — and public agencies — are receiving their money, and in what amounts. Such information provides invaluable context for efforts to amend the program, either through legislation or administrative rule.
The program continues to evolve. Even now, DEQ is adjusting administrative rules to update carbon intensity models and add fuels to the list that may generate credits, including alternative jet fuel and renewable propane. Every potential change involves lobbying by groups that seek to enhance or protect their advantage under the program. DEQ’s latest efforts even drew comment from a Texas-based trade association representing sorghum producers.
The Clean Fuels Program is a complex scheme that will continue to change under pressure from a huge array of interested industries — gas and diesel importers, alternative fuel producers, even sorghum farmers — and the bill is paid by Oregonians who are prohibited from peeking inside the black box hiding the movement of their hard-earned money.
That is wrong, and the Department of Justice should say so.