LOC News
Senate Committee Holds Hearing on New Carbon Pricing Proposal
This week, the Senate Environment & Natural Resources Committee, chaired by Senator Michael Debrow (D-Portland), heard invited testimony on a legislative concept to regulate greenhouse gases. Legislative concept (LC) 19 was posted on the Legislature’s website on the evening of January 10. The 156-page bill outlines greenhouse gas reduction goals and regulations that are similar to legislation from the 2019 session (HB 2020), but with some significant revisions, including how transportations fuels would be regulated. View the summary of LC 19 that was prepared by legislative counsel.
Some key components of the bill include:
Greenhouse gas reduction goals:
- At least 45% below 1990 emissions levels by 2035; and at least 80% below 1990 emissions levels by 2050. Covers anthropogenic emissions (excludes biogenic emissions generated from combustion of biomass derived fuels).
Additional goals:
- Promoting greenhouse gas emissions sequestration and mitigation; promoting adaptation and resilience for natural and working lands, fish and wildlife resources, communities, the economy and the state’s infrastructure in the face of climate change and ocean acidification; and providing assistance to households, businesses and workers impacted by climate change or by climate change policies.
State agency role:
- Establishes the Office of Greenhouse Gas Regulation and the Oregon Greenhouse Gas Reduction Board.
How does it work?
- The state will establish baseline emissions (measuring each metric ton of covered emissions) and will issue allowances (each allowance permits a covered entity to emit one metric ton of carbon dioxide equivalent). The allowances will be reduced over time to achieve greenhouse reduction goals. Some covered entities will receive free allowances, or a portion of free allowances. For others, allowances will need to be purchased through a state auction.
Covered entities:
- Includes electric system managers (investor-owned utilities, consumer owned utilities, electricity service suppliers, Bonneville Power Administration, and cogeneration transmission and distribution); natural gas suppliers; entities with an air contaminant discharge permit that emit 25,000 metric tons of carbon dioxide equivalent; and transportation fuels.
Transportation fuels (aviation fuels as well as fuels for watercraft and locomotives are excluded):
- Between 2022 and 2025: transportation fuels subject to the cap (i.e. not receiving free allowances) include fuels delivered to the Portland metropolitan planning area and truck stops located 1.5 miles or less from a state border (if the bordering state has not adopted a greenhouse gas reduction program).
- Between 2025 and 2051: transportation fuels subject to the cap include fuels delivered to the Portland metropolitan planning area, fuels delivered to cities that have aggregated motor vehicle fuel delivered of 10 million gallons or more; truck stops within 1.5 miles or less of a state border (if the bordering state has not adopted a greenhouse gas reduction program). The LOC has compiled a list of cities, based on data compiled by the state, that would be included as a result of fuel deliveries of 10 million gallons or more. Please note that this list does not include all cities within the Portland metropolitan planning area (which are also included).
- In addition, after 2025, a city or county may adopt an ordinance or resolution to opt in and, therefore, have transportation fuels sold within their city limits subject to the cap.
- If 19 counties opt-in, all transportation fuels would be subject to the cap.
Proceeds from sale of allowances:
- Revenues from the sale of allowances for transportation fuels will be credited to a newly established Transportation Decarbonization Investments Account. The fund will be established within the State Highway Fund.
- Other funds will either be deposited to the Common School Fund, if constitutionally required.
- Funds that are not otherwise dedicated as indicated above will be deposited in a newly established Oregon Greenhouse Gas Initiative Operating Fund to cover administrative costs for the program.
- Remaining funds will be deposited into the Climate Investments Fund, established under the bill.
Transportation Decarbonization Investments Account:
- 20% of revenues will be distributed to state for projects selected by the Oregon Transportation Commission; 80% to local governments for implementation, including planning for implementation, of metropolitan climate plans. A metropolitan climate plan, as defined in the bill, would implement a land use and transportation scenario adopted by a metropolitan service district (i.e. Metro regional government) and approved by the Land Conservation and Development Commission (LCDC); a land use and transportation scenario adopted by a metropolitan planning organization (in accordance with statutory guidelines established by the Oregon Department of Transportation and the Department of Land Conservation and Development) and that has been approved by the LCDC; or a transportation greenhouse gas emissions reduction plan adopted by a county or city that is located outside an urbanized area covered by a Metropolitan Planning Organization (MPO) or a metropolitan service district (plan must be approved by DLCD).
- Projects eligible for funding include, but are not limited to, enhancing roadway drainage, improving slope stability, investing in safe routes to school, retrofitting or replacing certain diesel engines, reducing vehicle miles traveled through bike, pedestrian or other multimodal improvements and traffic signal optimization. Funds may also be used to increase the resilience of transportation infrastructure and evacuation routes against the effects of climate change, extreme precipitation, sea level rise and extreme temperatures and wildfires.
- Funding for planning may not exceed 1% of the total funds in the Transportation Decarbonization Investments Account.
Transportation revenue distribution to local governments:
- The Oregon Transportation Commission (OTC) shall proportionately distribute revenues to each local government with an approved climate plan. The formula for distribution must account for population and vehicle miles traveled.
- Of the moneys allocated for a metropolitan service district or a metropolitan planning organization, the commission shall distribute half the moneys to the metropolitan service district or metropolitan planning organization and half the moneys to the counties and cities within the metropolitan service district or metropolitan planning organization. The proportionate share allocated for distribution to each county and city within the metropolitan service district or metropolitan planning organization shall be determined based on the formula adopted by the OTC (based on population, vehicle miles traveled among other factors that may be considered).
- o Funds expended by local governments must be expended in a manner that, to the extent practicable, will yield the greatest reductions in greenhouse gas emissions per dollar spent. In allocating funds for specific expenditures, the metropolitan service district must consult with a joint policy advisory committee on transportation, counties or cities within a metropolitan service district must consult with that district, and an MPO must consult with the city and county governing bodies within the MPO.
Climate Investments Fund:
- Revenues from the auction of allowances that are deposited into the Climate Investments Fund will be disbursed as follows:
- 10% for eligible Indian tribes;
- 25% for the Oregon Watershed Enhancement Board to benefit natural and working lands;
- 25% for the Oregon Department of Forestry for wildfire mitigation;
- 20% to local governments, including cities, counties and special districts for projects that support the goals in section 2 of the bill (priority for projects that reduce greenhouse gas emissions);
- 20% distributed to state agencies for projects, programs and activities that support the goals in section 2 of the bill.
- The Oregon Greenhouse Gas Reduction Board must endeavor to distribute a majority of funds to “impacted communities”. (The Oregon Greenhouse Gas Reduction Board will determine what communities are designated as “impacted” based on criteria including those at risk of being disproportionately impacted by climate change. The methodology for determining “impacted community status must take into consideration geographic, socioeconomic, historic disadvantage, public health and environmental hazard criteria.
Procurement provisions for the Transportation Decarbonization Investments Fund & Climate Investments Fund:
- For the purpose of projects funded through revenues from the Transportation Decarbonization Investments Fund:
- State contracting agencies must provide a preference of no more than 10% for building materials manufactured by covered entities subject to a carbon pricing program (building materials include asphalt, cement, concrete or any other aggregate product, aluminum, steel, iron, coatings for steel and iron, glass, manufactured wood products and copper). ODOT must also purchase roadside vegetation grown and propagated from Oregon-based nursery stock.
- Local contracting agencies may provide a preference of no more than 10% for building materials manufactured by covered entities.
Labor and contracting provisions:
- If a construction project or a transportation receives more than $50,000 in funding from moneys in the Climate Investments Fund or the Transportation Decarbonization Investments Account, the primary contractor participating in the construction project:
- Shall pay the prevailing rate of wage for an hour’s labor in the same trade or occupation in the locality where the labor is performed;
- Shall offer health care and retirement benefits to the employees performing the labor on the construction project;
- Shall participate in an apprenticeship program registered with the State Apprenticeship and Training Council;
- May not be a contractor listed by the Commissioner of the Bureau of Labor and Industries under ORS 279C.860 as ineligible to receive a contract or subcontract for public works;
- Must demonstrate history of compliance with federal and state wage laws.
- The state will adopt model rules for state contracting agencies to use. Rules must include requirements for the use of a project labor agreement for construction projects that receive more than $200,000 in funding from moneys in the Climate Investments Fund or the Transportation Decarbonization Investments Account. Additional requirements apply to state contracting agencies.
Contact: Tracy Rutten, Lobbyist – trutten@orcities.org
Last Updated 1/17/20