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Case 3:15-cv-00467-AADocument 51Filed 06/05/15Page 1 of 58ELLEN F. ROSENBLUMAttorney GeneralCHRISTINA L. BEATTY-WALTERS #981634CARLA A. SCOTT #054725RACHEL A. WEISSHAAR #124964Assistant Attorneys GeneralOregon Department of Justice1515 SW Fifth Ave, Suite 410Portland, OR 97201Telephone: (971) 673-1880Fax: (971) 673-5000Email: j.state.or.usRachel.Weisshaar@doj.state.or.usOf Attorneys for DefendantsIN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF OREGONPORTLAND DIVISIONAMERICAN FUEL & PETROCHEMICALMANUFACTURERS, AMERICANTRUCKING ASSOCIATIONS, INC., a tradeassociation, and CONSUMER ENERGYALLIANCE, a trade association,Plaintiffs,Case No. 3:15-cv-00467-AASTATE DEFENDANTS’ MOTION TODISMISS AND MEMORANDUM INSUPPORTORAL ARGUMENT REQUESTEDv.JANE O'KEEFFE, ED ARMSTRONG,MORGAN RIDER, COLLEEN JOHNSON,and MELINDA EDEN, in their officialcapacities as members of the OregonEnvironmental Quality Commission; DICKPEDERSEN, JONI HAMMOND, WENDYWILES, DAVID COLLIER, JEFFREYSTOCUM, CORY-ANN WIND, LYDIAEMER, LEAH FELDON, GREG ALDRICH,and SUE LANGSTON, in their officialcapacities as officers and employees of theOregon Department of Environmental Quality;ELLEN F. ROSENBLUM, in her officialcapacity as Attorney General of the State ofOregon; and KATE BROWN, in her officialcapacity as Governor of the State of Oregon,Defendants,Oregon Department of Justice1515 SW Fifth Ave, Suite 410Portland, OR 97201(971) 673-1880 / Fax: (971) 673-5000

Case 3:15-cv-00467-AADocument 51Filed 06/05/15Page 2 of 58andCALIFORNIA AIR RESOURCES BOARD;STATE OF WASHINGTON; OREGONENVIRONMENTAL COUNCIL; CLIMATESOLUTIONS; ENVIRONMENTALDEFENSE FUND; NATURAL RESOURCESDEFENSE COUNCIL; and SIERRA CLUB,Intervenor Defendants.STATE DEFENDANTS' MOTION TO DISMISS AND MEMORANDUM IN SUPPORTOregon Department of Justice1515 SW Fifth Ave, Suite 410Portland, OR 97201(971) 673-1880 / Fax: (971) 673-5000

Case 3:15-cv-00467-AADocument 51Filed 06/05/15Page 3 of 58TABLE OF CONTENTSI.INTRODUCTION . 1II.FACTUAL BACKGROUND. 3III.ARGUMENT. 5A.Standards for motions to dismiss . 5B.Plaintiffs’ discrimination claims should be dismissed. 61.Dormant Commerce Clause standards. 62.Plaintiffs fail to plead a valid discrimination claim againstpetroleum-based fuels . 83.Plaintiffs fail to plead a valid discrimination claim against ethanol. 104.Plaintiffs’ facial discrimination claim fails because the Clean FuelsProgram distinguishes between fuels based on lifecycle GHGemissions, not origin . 115.The Clean Fuels Program does not discriminate in its purpose. 136.Plaintiffs’ discriminatory effects claim should be dismissedbecause it is not ripe. 14C.The Clean Fuels Program does not directly regulate commerce that occursentirely outside Oregon’s boundaries . 16D.Plaintiffs’ preemption claims should be dismissed. 181.Courts recognize the presumption that states retain their historicpolice powers to protect the environment . 192.The plain language of the Clean Air Act demonstrates a clear andmanifest intent to preserve state authority to regulate fuels . 203.Plaintiffs’ express preemption claim fails. 204.a.Plaintiffs fail to plead facts sufficient to support theapplication of section 211(c)(4)(A)(i) preemption . 22b.EPA has not found that it is unnecessary to regulate thecarbon intensity of fuel . 23c.EPA’s 2009 Endangerment Finding reinforces the states’ability to regulate the carbon intensity of fuel . 25The Clean Fuels Program is not preempted by federal RenewableFuels Standard, the Energy Policy Act of 2005, or the EnergyIndependence and Security Act of 2007 . 26Page iOregon Department of Justice1515 SW Fifth Ave, Suite 410Portland, OR 97201(971) 673-1880 / Fax: (971) 673-5000

Case 3:15-cv-00467-AAIV.Document 51Filed 06/05/15Page 4 of 58a.Plaintiffs cannot overcome the presumption againstpreemption because the Clean Air Act demonstratesexpress intent to preserve state authority to regulate fuelsvia low carbon fuel standards . 28b.The EISA further preserves state authority to regulate fuels . 29c.This Court need not reach the issue whether the CleanFuels Program actually conflicts with the Renewable FuelStandard . 30d.Oregon’s Clean Fuels Program does not conflict with thepurposes or objectives of the Renewable Fuel Standard . 31CONCLUSION. 35APPENDIX OF AUTHORITIESPage iiOregon Department of Justice1515 SW Fifth Ave, Suite 410Portland, OR 97201(971) 673-1880 / Fax: (971) 673-5000

Case 3:15-cv-00467-AADocument 51Filed 06/05/15Page 5 of 58TABLE OF AUTHORITIESCasesAbbott Laboratories v. Gardner, 387 U.S. 136 (1967). 15Ashcroft v. Iqbal, 556 U.S. 662 (2009) . 5, 6Bacchus Imports, Ltd. v. Dias, 468 U.S. 263 (1984) . 13Black Star Farms LLC v. Oliver, 600 F.3d 1225 (9th Cir. 2010) . 14Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573 (1986). 16California v. FERC, 495 U.S. 490 (1990) . 20City of Burbank v. Lockheed Air Terminal, Inc., 411 U.S. 624 (1973) . 20City of Philadelphia v. New Jersey, 437 U.S. 617 (1978) . 12Comptroller of Treasury of Md. v. Wynne, 135 S. Ct. 1787 (2015) . 14CSX Transp., Inc. v. Easterwood, 507 U.S. 658 (1993) . 30Dep’t of Revenue of Ky. v. Davis, 553 U.S. 328 (2008) . 6, 7, 11English v. Gen. Elec. Co., 496 U.S. 72 (1990) . 19, 31Entergy Nuclear Vermont Yankee, LLC v. Shumlin, 733 F.3d 393 (2nd Cir. 2013). 15Exxon Corp. v. Governor of Maryland, 437 U.S. 117 (1978) . 7, 8, 9, 15Exxon Mobil Corp. v. EPA, 217 F.3d 1246 (9th Cir. 2000). 19, 20, 30, 31Freightliner Corp. v. Myrick, 514 U.S. 280 (1995). 30Geier v. Am. Honda Motor Co., 529 U.S. 861 (2000) . 30, 31, 34Gen. Motors Corp. v. Tracy, 519 U.S. 278 (1997) . 7, 8Green v. Fund Asset Mgmt, L.P., 245 F.3d 214 (3rd Cir. 2001). 19, 31Healy v. The Beer Institute, 491 U.S. 324 (1989). 16Hughes v. Oklahoma, 441 U.S. 322 (1979) . 14In re Gilead Sciences Sec. Litig., 536 F.3d 1049 (9th Cir. 2008) . 6Leite v. Crane Co., 749 F.3d 1117 (9th Cir. 2014) . 5Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001). 20Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996) . 31Page iiiOregon Department of Justice1515 SW Fifth Ave, Suite 410Portland, OR 97201(971) 673-1880 / Fax: (971) 673-5000

Case 3:15-cv-00467-AADocument 51Filed 06/05/15Page 6 of 58Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456 (1981) . 13National Ass’n of Optometrists & Opticians LensCrafters, Inc. v. Brown, 567 F.3d 521(9th Cir. 2009). 7, 8New Energy Co. of Ind. v. Limbach, 486 U.S. 269 (1988) . 6O’Hara v. General Motors Corp., 508 F.3d 753 (5th Cir. 2007) . 34Ohio Forestry Ass’n Inc. v. Sierra Club, 523 U.S. 726 (1998) . 15, 16Or. Waste Sys., Inc. v. Dep’t of Envtl. Quality of State of Or., 511 U.S. 93 (1994) . 6, 10Oxygenated Fuels Ass’n Inc. v. Davis, 331 F.3d 665 (9th Cir. 2003) . 19, 20, 31, 33Oxygenated Fuels Ass’n, Inc. v. Pataki, 158 F. Supp. 2d 248 (N.D.N.Y. 2001). 33Pike v. Bruce Church, Inc., 397 U.S. 1376 (1970) . 7Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947). 19Rocky Mountain Farmers Union v. Corey, 730 F.3d 1070 (9th Cir. 2013). passimRocky Mountain Farmers Union v. Goldstene, 843 F. Supp. 2d 1042 (E.D. Cal. 2011) . 23S. Pac. Transp. Co. v. City of Los Angeles, 922 F.2d 498 (9th Cir. 1990) . 15S.D. Myers v. City of San Francisco, 253 F.3d 461 (9th Cir. 2001). 17Sam Francis Found. v. Christie’s, Inc., 784 F.3d 1320 (9th Cir. 2015) . 17Sprewell v. Golden State Warriors, 266 F.3d 979 (9th Cir. 2001) . 6Sprietsma v. Mercury Marine, 537 U.S. 51 (2002) . 30State of North Dakota ex rel. Stenehjem v. Freeeats.com, Inc., 712 N.W.2d 828(N.D. 2006) . 30, 31The Wilderness Society v. Kane County, 632 F.3d 1162 (10th Cir. 2011) . 27Thomas v. Anchorage Equal Rights Comm’n, 220 F.3d 1134 (9th Cir. 1999). 5Thomas v. Union Carbide Agr. Prod. Co., 473 U.S. 568 (1985). 15, 16West Lynn Creamery, Inc. v. Healy, 512 U.S. 186 (1994). 14StatutesORS 468A.200. 1Page ivOregon Department of Justice1515 SW Fifth Ave, Suite 410Portland, OR 97201(971) 673-1880 / Fax: (971) 673-5000

Case 3:15-cv-00467-AADocument 51Filed 06/05/15Page 7 of 58United States Code42 U.S.C. § 7416. 2042 U.S.C. § 7545(c)(1). 22, 2342 U.S.C. § 7545(c)(4)(A) . 21, 22, 2842 U.S.C. § 7545(k)(1)(A). 2342 U.S.C. § 7545(o) . 26, 32, 3342 U.S.C. §§ 1857c-10. 21Other Authorities153 Cong. Rec. H14430 (Dec. 6, 2007). 29Energy Independence and Security Act of 2007, Pub. L. No. 110-140, § 210 (b), 121Stat. 1492 (2007). 29, 32, 35Energy Policy Act of 2005, Pub. L. No. 109-58, § 1501(a)(2), 119 Stat. 594, (2005). 31, 32Rules and Regulations59 Fed. Reg. 7716 (Feb. 16, 1994) . 22, 24, 2574 Fed. Reg. 66,496 (Dec. 15, 2009) . 2675 Fed. Reg. 14,670 (Mar. 26, 2010). 33, 3479 Fed. Reg. 1430 (Jan. 8, 2014) . 26Cal. Code Regs tit. 17, §§ 95480-90. 5Fed. R. Civ. P. 12(b)(1). 5Fed. R. Civ. P. 12(b)(6). 5OAR 340-253-0000 . 13, 23OAR 340-253-0000 – 8080 . 5OAR 340-253-0040 . 1, 2, 3OAR 340-253-0100 – 0250 . 3OAR 340-253-0400 . 3, 4OAR 340-253-0500 . 3OAR 340-253-0600 . 3Page vOregon Department of Justice1515 SW Fifth Ave, Suite 410Portland, OR 97201(971) 673-1880 / Fax: (971) 673-5000

Case 3:15-cv-00467-AADocument 51Filed 06/05/15Page 8 of 58OAR 340-253-0620 – 0650 . 3OAR 340-253-1000 . 4OAR 340-253-1050 . 4OAR 340-253-8010 – 8020 . 3, 4, 16OAR 340-253-8030 . 4, 9OAR 340-253-8030 – 8040 . 4Constitutional ProvisionsU.S. Const. art. I, § 8. 6U.S. Const. art. III, § 2. 5U.S. Const. art. VI. 19Page viOregon Department of Justice1515 SW Fifth Ave, Suite 410Portland, OR 97201(971) 673-1880 / Fax: (971) 673-5000

Case 3:15-cv-00467-AADocument 51Filed 06/05/15Page 9 of 58LOCAL RULE 7-1 CERTIFICATIONCounsel of record for Defendants Jane O’Keeffe, Ed Armstrong, Morgan Rider, ColleenJohnson, Melinda Eden, Dick Pedersen, Joni Hammond, Wendy Wiles, David Collier, JeffreyStocum, Cory-Ann Wind, Lydia Emer, Leah Feldon, Greg Aldrich, Sue Langston, AttorneyGeneral Ellen F. Rosenblum, and Governor Kate Brown (hereinafter “State Defendants”)certifies that she made a good faith effort, through a telephone conference with Plaintiffs’counsel, to resolve the matters herein but was unable to do so.MOTION TO DISMISSState Defendants, by and through their counsel of record, move for an order dismissingthis action for lack of subject-matter jurisdiction and failure to state a claim upon which reliefcan be granted. This motion is brought pursuant to Federal Rules of Civil Procedure 12(b)(1)and 12(b)(6) and is supported by the following Memorandum in Support.MEMORANDUM IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISSI.INTRODUCTIONClimate change seriously threatens Oregon’s economy, environment, and public health.ORS 468A.200 (outlining legislative findings on danger of climate change). The Oregon CleanFuels Program is designed to reduce greenhouse gas (GHG) emissions from transportation fuels.The program requires fuel importers and producers to reduce the average lifecycle GHGemissions1 of transportation fuels that will be used in Oregon by 10 percent over 10 years.1Lifecycle GHG emissions are:(a) The aggregated quantity of greenhouse gas emissions,including direct emissions and significant indirect emissions, suchas significant emissions from changes in land use associated withthe fuels;(b) Measured over the full fuel lifecycle, including all stages offuel production, from feedstock generation or extraction,production, distribution, and combustion of the fuel by theconsumer; and(c) Stated in terms of mass values for all greenhouse gases asadjusted to CO2e to account for the relative global warmingpotential of each gas.OAR 340-253-0040(37).Page 1 - STATE DEFENDANTS’ MOTION TO DISMISS AND MEMORANDUM IN SUPPORTTBW/mjo/6539157-v6Oregon Department of Justice1515 SW Fifth Ave, Suite 410Portland, OR 97201(971) 673-1880 / Fax: (971) 673-5000