Oregon’s ambitious greenhouse gas reduction program is facing legal challenges again, a year after it restarted following a previous court decision.

This time, more than two dozen groups, including gas utilities, labor unions and trade associations, are once again challenging the state’s authority to implement the Climate Protection Program, which was created through an executive order rather than legislation.

The groups also claim the program will “inflict substantial and irreparable harm” to businesses that could face millions of dollars in costs and Oregonians, who see some of those costs reflected on their utility bills.

“We can work collectively to reduce greenhouse gas emissions, but we cannot do so through a program that is economically infeasible and simply piles costs onto Oregon’s families, businesses and even governments,” Oregon Business & Industry President and CEO Angela Wilhelms said in a statement. “We can support ideas that are affordable, accountable and legally sound, but the Climate Protection Program fails on all three counts. That’s why this coalition saw a need to take legal action.”

On Thursday, nearly 30 petitioners led by the Oregon Business & Industry filed an Oregon Court of Appeals petition against the Oregon Department of Environmental Quality, which oversees the Climate Protection Program. The program imposes gradual limits on greenhouse gas emissions from oil and natural gas companies, like NW Natural, Avista Corporation and Cascade Natural Gas, with a target of 90% reduction by 2050. The program also allows fossil fuel suppliers to reduce emissions through the program’s Community Climate Investment credit program; if regulated entities do not reduce their emissions, they must buy credits at the cost of $136 per ton of carbon emissions.

The state’s effort to reduce its greenhouse gas emissions means tackling some of the hardest industries to regulate — fossil fuel industries.

Fossil fuels, like oil and gas, have been an essential part of people’s lives, heating homes and fueling vehicles. But as the climate crisis worsens and science indicates the burning of fossil fuels continues to make human-caused climate change worse, companies and industries that rely on these commodities are facing bleak trade-offs in states pushing them to reduce carbon emissions and move toward renewable energy sources.

This presents a critical challenge for industries whose business model relies on the distribution and delivery of fossil fuels.

NW Natural has long criticized the Climate Protection Program for imposing limits or fees on its use of natural gas while not imposing similar limits and costs on electric companies that use gas to generate power, officials with the company have told OPB in the past. Electric utilities are required to end use of greenhouse gas emitting fuels by 2040 under a separate program passed by the state Legislature, but they do not have to purchase emissions credits for the fossil fuels they use before then.

In the lawsuit they planned to file Thursday, petitioners argue the program’s compliance costs are the highest in the nation and don’t allow for affected companies to link with other neighboring cap-and-trade programs like Washington, California and Québec. Earlier this year, those three jurisdictions have agreed to link their programs, creating a massive cap-and-trade program, and they are currently drafting an agreement.

“It’s a ‘cap’ without a legitimate ‘trade’ component and has no legislative oversight, making it an outlier versus every other program out there,” Alliance of Western Energy Consumers CEO Bill Gaines said in a statement. His group is a plaintiff in the lawsuit and represents businesses from Oregon, Washington and Idaho in rate proceedings and regulatory proceedings that directly affect energy costs.

“The (Climate Protection Program) is a real problem because it doesn’t link to market-based carbon programs in neighboring states, and the costs are dramatically higher. This is an issue that can only practically be addressed by the Oregon Legislature.”

But the idea of a cap-and-trade program has been a controversial issue in the state Legislature for many years. Republican lawmakers shut down the Oregon Legislature two years in a row to stop majority Democrats from passing a cap-and-trade bill.

Environmental groups argue the Climate Protection Program is needed to help the state reduce its greenhouse gas emissions. Oregon is already two years behind its own schedule. If this program goes away, the state may not reach any of its goals.

Climate Protection Program’s legal challenges

The first iteration of the Climate Protection Program was created under former Gov. Kate Brown’s Executive Order 20-04 as an attempt to regulate emissions after legislators failed to pass their own climate policies. Brown’s order directs certain state agencies to take action to reduce greenhouse gas emissions and mitigate the impact of climate change.

When it launched in 2022, it was deemed one of the strongest climate action programs in the nation.

But the fossil fuel groups who would be regulated under the program filed a lawsuit in early 2022 looking to block its implementation entirely.

In late 2023, the Oregon Court of Appeals invalidated the program saying DEQ failed to comply with public disclosure requirements when adopting rules under the federal Clean Air Act. That earlier lawsuit also challenged the Oregon Department of Environmental Quality’s authority to enforce the program.

Rather than appeal the court’s decision, DEQ decided to restart. The rebooted Climate Protection Program began implementation in January 2025. A court decision on whether the agency had authority to implement the program never came.

DEQ staff have said in the past that they were confident in the agency’s authority, but Thursday’s lawsuit brings up that concern once again.

The groups suing claim that “much has changed” since Brown’s executive order, including inflation, supply chain disruptions, federal shifts in energy policy and meeting energy demand.

“Notwithstanding these seismic economic shifts, the new Rule sticks with an essentially similar structure to the original iteration, fails to address the substantive legal flaws, and includes no concrete protections for Oregonians against the exorbitant increases in energy costs and associated affordability impacts this Rule will produce,” the lawsuit claims. “… [we] are asking the Court in the contemporaneous Petition to decide whether this sweeping regulatory program oversteps the Environmental Quality Commission’s limited authority under Oregon law.”

This story may be updated.

News Source : https://www.opb.org/article/2026/04/16/oregon-climate-protection-program-lawsuit/