Before we bore you with a bunch of details, consider the following question. If the state government outsourced the collection and spending of taxpayers’ money to a big corporation — Chevron, say — and if that corporation hid its handling of taxpayers’ money by claiming that it was a trade secret, would you be uneasy?
If you said “no,” stop here and get back to work. Chevron doesn’t pay you to read the newspaper on company time.
If you said “yes,” then you should be very worried about a recent decision by Marion County Circuit Judge Mary Mertens James. You also should cross your fingers and hope the Oregon Department of Justice, which believes taxpayers should be able to view such spending, files an appeal.
Boring details time.
The Oregon Legislature outsourced the collection and spending of what is, in essence, tax money when it created the state’s Clean Fuels Program a decade ago. The program, which was fully implemented in 2016, seeks to lower the so-called carbon intensity of road fuels by 10 percent by 2025. Carbon intensity is a measure of the greenhouse gases produced during a given fuel’s entire life cycle, which includes, among other things, its production, transportation, storage and combustion.
Importers of road fuels such as gasoline may effect some of the required carbon-cutting by mixing lower-carbon fuels like ethanol into their products. But the program’s annual reduction requirements ratchet up sharply over its duration, and eventually mixing alone can’t get the job done. At this point, importers generate carbon deficits, which can be offset through the purchase of carbon credits. Carbon credits are generated by program participants that generate low-carbon fuels.
The Clean Fuels Program is a complex fuel-subsidy scheme in which fuel suppliers pass along some or all of the cost of compliance at the pump, then shift what is, in effect, tax revenue to “green” businesses through credit purchases. As of the end of March, more than $53.5 million worth of credits had been sold. And the effect on the cost of a gallon of gasoline last year was about one cent, up from about a quarter of a cent in 2017.
The problem with the movement of this public money is the fact that it happens entirely in the dark. Even though the state Department of Environmental Quality administers the credit market, the buying and selling of credits are hidden from taxpayers, who therefore are unable to see which entities gain the most as the result of the program and to what degree. Instead, taxpayers and policymakers are expected to trust state officials to exercise appropriate oversight. Nervous yet?
Last October, a Bulletin editor submitted a records request to DEQ in pursuit of transaction details the state does not disclose, including the names of the parties involved in all transfers and what, exactly, they bought and sold. DEQ denied the request, arguing that the information in question amounted to a trade secret and was thus protected.
That’s right. Critical details involving the transfer of your money on a government-administered exchange cannot be disclosed because the industries doing the buying and selling are entitled to secrecy. Or so said DEQ.
The Bulletin appealed the denial to the Oregon Department of Justice, which in November overruled DEQ and ordered the release of the records. Even if the information in question qualified as a trade secret, the DOJ concluded, the public interest weighs in favor of transparency. The benefits of openness, the DOJ wrote, include “greater public understanding of who profits financially from this consumer-funded regulatory program. This, in turn, will ensure the public and legislators are better able to evaluate, and potentially improve, the program’s efficiency.”
Before DEQ could comply, however, the fuel industry’s legal battalion sprang into action. Chevron, which imports fuels, sued to stop the release of records. It was followed quickly by others in the industry. And on April 18, Judge James ruled in favor of Chevron and its allies. Take that, taxpayers and transparency.
Fortunately, the legal road does not have to end here. The DOJ can, and should, appeal Judge James’ opinion. If lawmakers want to set up a shadow system of collecting and spending what fits the “quacks like a duck” definition of tax revenue, fine. But allowing corporations to collect and spend public money in secret should alarm every non-Chevron employee in Oregon.
Is this an uphill battle? Perhaps. But Judge James herself is proof of the fallibility of judges and the value of the appeals process. In a controversial 2005 decision, she declared Measure 37, a high-profile property-rights measure, unconstitutional. Only months later, the state Supreme Court eviscerated her opinion in upholding the 2004 initiative.
If defending the will of voters was worth a fight back then, then surely supporting transparency as a check on the outsourcing of government activity is worth a fight now.