The Commerce Clause was designed not only to give Congress the authority to regulate interstate commerce, but also to ensure that states don’t disrupt the flow of goods and services over state lines. States cannot prefer in-state producers, sellers, or buyers over out-of-state ones, or regulate conduct outside the state. This is a fundamental principle of federalism that prevents states from gaining advantage over others when it comes to trade.
Despite that anti-protectionist mechanism, Oregon enacted its Low Carbon Fuel Standard, which caps emissions not just from the use of fuels, but also from their production and transportation. It uses a methodology called “life cycle analysis” to include these factors. But a life cycle analysis that includes transportation penalizes out-of-state producers—who often have to travel much further than in-state producers—forcing them to buy credits, while allowing Oregon producers to generate credits much more easily.
The U.S. Court of Appeals for the Ninth Circuit upheld an identical California law in Rocky Mountain Farmers Union v. Corey(2013). No doubt Oregon saw Rocky Mountain as a green light to enact its policy, and a Ninth Circuit panel here likewise upheld the Oregon law.
Read more at https://www.cato.org/blog/states-cant-engage-protectionism-labeling-it-environmentalism
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