cut so this case is about the clean the oregon coast clean fuel program and it's a program that's assigned to restructure the interstate market for transportation fuels in oregon favors in state biofuels over over out of state fuels well so yes you're right it's quite clear that the that the regulation under the regulation all  oregon are they not right and all of them get benefits they only get benefits none of them get deficit's so this is what distinguishes this crime is i read the regs i thought there were some oregon fuels that actually got fewer carbon fewer credits than some out of state feels and i want about but they all get credits they all get it right all an add on time i know some out of state feels like it even greater credits correct there are but the focus here is the focus here is as to petroleum fuels which  gas and diesel all of them get deficit so only a state in your view only a state that produces a fuel may regulate its use in the state no i don't think so i think what i think the good example here is baucus so in baucus the state of of why i can't give a benefit to pineapple why when it's competing against others from entities from other companies there there's actually it in state product that it's giving a benefit to correct right but that was a benefit and so what's happening here is the converse is right but you just bear with me for a second because this is what i need to understand your argument really turns on the absence of an in state producing market in oregon for the for these for the fuels produced by the people that you represent correct well i think the more we can produce these fuels and if they were all subject to the same credits and deficits you wouldn't have a concern so what what i'd say your honor is if if oregon produced petroleum fuels and i think what the rocky mountain analysis as to petroleum fuels would will apply because ok so so that  that that means that we're dancing around this so i need to get to it that means your argument is really based on the absence of production of those fuels inside the state of oregon correct that's right with regard to petroleum that's right and and  with regard to every other disadvantage fuel because when the what oregon does produce a fuel there's no evidence that it's fuel is is treated differently than a fuel from any other state well the i mean the the the with taking a step back the question is whether there is discrimination and discrimination as differential treatment between in state and out of state entities and so the the out of state entity that we're for that i'm focusing on here is petroleum it's all toughest right and the reason that there's discrimination in your view i take it in the us i'm wrong because i want to come back to this is that because oregon produces no petroleum and the impact your clients who are out of state producers necessarily discriminate against your clients correct they necessarily discriminate under the program which says says to our clients you are going to generate deficits and the way you get rid of those de by buying credits from your competitor not just the competitors i would like to hear you are if oregon produced petroleum which was subject to exactly the same regulation as your clients petroleum you would have no complaint correct why the why regulates to benefit pineapple wine well it doesn't say that it's just regulating in state but it what it's doing is it's it is benefiting and in state and city and as a result burdening the know you are that would tell me what the state benefit no the reason there's an in state benefit in this is the reason that this is a subsidy and this is a subsidy case much much like wessling creamery is we have to get rid of our deficits and the people we buy the deficits are for those people who create credits and the in state fewer producers in oregon they all create credit producers create credits they do but that's ok but that doesn't that doesn't change the fact that there's discrimination going right why can't you buy the credits from the out of state producers you could but that would be just that wouldn't do away with the discrimination that's that's as between the in state producers with whom we compete with so we have a deficit  additional cost and so it was whether well harm does during the state producers have deficits i'm sorry do any in state producers have deficits under the statute or no no in state producers have deficits there's a there's there's a diesel fuel there's a  bio diesel producer just credits there's a an ethanol producer just credits so they they create they have credits and we have deficits and that's why it's discriminatory is because this is a subsidy that we the out of state or has to pay to the instigator to prop up the instigators business and in fact if this is all by design this is by design and this the governor said when this is being designed what we want to do is look we want to we want to build up our in state industry and how do we do that well the reason we want to do that is because each year we're sending six billion dollars out of state to buy out of state fuels i mean i mean i mean change the emphasis under rocky mountain we allow the ethanol purpose in effect claims under the commerce clause to be remanded for the proceedings right that's true but we didn't allow we dismissed the purpose and effect claims for petroleum because they were on summary judgment right that's true as well  that's true and if i could just take one step further the distinction that we're drawing between what's going on in oregon and what happened in rocky mount with regard to crude is that the basis for the decision in rock in rocky mountain as to california crude with regard to the purpose was look there's some in state crude producers there's some out of state crude producers the instigators get burdened the instigators get benefit so there's a you know that it's a wash or that we can't see discrimination here we think that the effect of this is just follows from the design which is this design that the credit credit credit credit producers they get a benefit from the deficit producers and we have been we've been determined to be that what we were talking about why we if you will remain and the ethanol purpose in effect claims under the commerce clause in rocky mount yeah i mean isn't that the same theory i think it is the same it is a similar theory it's this idea of discriminating against against interstate commerce it's discriminating against your competitors and it is and we have a purpose in effect argument so yes i understand can you separate me going one further if you will i'm going to interrupt judge her words if if in fact we were to remap this claim it seems to me what you're really suggesting if you want more discovery instigators they get credits and so this is this is out now the subsidy so i think are you saying you don't need any more evidence i think we have a lot of evidence that we need we'd like to present oh i see now but i'm still having difficulty on that point so tell me what is it that you would put before the district judge is going to be my on purpose i know what your effect argument is because you've got told me what more would you put before the district judge and you already did on the purpose of the  one and i want to ask the question i'm asking is you argue in your brief that this statute is unconstitutional because its purpose was to favor in state industries at the at the expense of out of state industries i understand your argument that that's the effect of the statute and that's that's perfectly your argument and that's perfectly clear to me i wonder stand what additional evidence she would place before the district court about the purpose recognizing that our cases say that we treat the purpose stated in the statute as the purpose in the absence of some evidence that it's a sham so whatever that what would we remained about on purpose if we if we if we followed the i think they said more than that your honor i think that they said we were looking to claw back some money that's each year is going out when we are that we need to spend with regard to what is going to be just a school here for a moment i can't aspire to it who always said oh that's what legislators say just look at what the statute does why would we look at what people said on the floor of the oregon senate to determine the purpose of the statute well just to be fair i think that i think that the purpose of this regulation there are multiple purposes here certainly my colleagues on the other side are going to say this is a purely environmental purpose but i think if you look at the regulation it's got multiple purposes and one of those problems with my question is don't they appear from the face of the what what it where however good your argument is don't they appear from the face of the regulation do we really need evidence about what the purposes i think that we do have evidence but i do agree that that the focus of this is going to be on the regulation and most of the case most of the cases look to the regulation and says hey is this unrelated to economic protectionism and i think if you look at this regulation in toto you can't say it's unrelated to economic protectionism the way it was promoted was this is great for our economy nobody's going to be good going to get hurt it's all upside and so i don't think you know i think all of that i'm not sure where that is that whether that's new evidence it seems like those are materials that we've already identified so i'm just trying to understand if we really man did what the district judge would do that she hasn't already done do you think she did incorrectly with respect to this issue and what i think she didn't incorrectly as she viewed this as there being a solitary purpose to a statute and everything that's wrong and i think that that doesn't reflect the the case law in this the case law in this  talks about the fact that statutes have multiple purposes and when they're being defended you have states come and say we have this purpose this purpose and this purpose i think that the statute has an economic purpose as well as any environmental that they advocate this is fact that it have multiple purposes make it unconstitutional or does the unconstitutional purpose have to be the primary one well i think the case law in the example is oregon waste versus oregon d e q is that whatever purpose is identified has to be unrelated to economic protectionism and so there is a component of economic protectionism then i think it does sound as what it does get subject to strict scrutiny and so that another way of looking at this is to strict scrutiny on commerce clause cases yes your honor for a discriminatory discriminatory statute and our statute that's facially discriminatory no more than that for a statute chris purpose but have to strictly scrutinize the purpose of the oregon statute in order to determine whether or not its real motive was not environmental protection but but helping in state industry i don't think we're saying the same i don't like you i'm sure we're not cross that can't be true you know what i'm trying to say is that that and the best case i have for this is philadelphia versus new jersey and philadelphia nurses new jersey is a case of about waste and in that case new jersey shut off any waste coming in from philadelphia and the court said look we accept that you have an environmental purpose for this but this but the commerce clause not addresses not only in the environmental purpose not only the ends but the means and that's what's going on here if they can identify an environmental purpose there that's not enough can try to address that environmental purpose larger than the tax it placed under sale of so called clean if you would that's why we have the constitution i think under these circumstances where all the petroleum is from out of state and all of the and the  are in stake competitors i think there's going to be a differential there and it would be no different than what happened in baucus would be no different than what happened there was there was a differential taxation system there was some one where there was a differential taxation system as i understand it on the same product no it wasn't on the same product it was on his on his own pineapple wine that competed against other liquor laws against wine because liquor but it's gone to the under rocky mountain it's quite clear that for purposes of commerce clause substantial similarity it turns on whether the to compete against one another in the same market ethanol competes with gasoline biodiesel can compete with diesel they are in the same market that's that's controlling precedent from rocky mountain itself so your view is that under rocky mountain we would have to hold on assume the california system for a moment take us out of oregon california imposed a tax on petroleum products which was higher than the tax it imposed on ethanol you said that would be unconstitutional in california i think that would be a harder case because of what happened what happened in rocky mountain where you have in state interest and in fact that's what rocky mountain relied upon and said we be the fact that you  burdening an in state interest that is strong evidence that you're not trying to discriminate because you have that you have that internal check on the on on on the decision making your honor i have three mi please the court denise hear back on behalf of the environmental quality commissioners of the state of oregon and their staff with me today is elaine meccan stock who represents the intervenor the california air resources board and with the court's permission i'd like to reserve seven minutes of my time for her and i realize that i need to correct that you can do that yourself i guess you could let her do it i'm just going to tell you that when you get people on the on the stand like judge her what's in myself sometimes that reserving the time is impossible and we're not going to have observed yet to sworn in and we're not going to do it faria so you're going to have to do it yourself and therefore i just want to warn you vance we don't we don't sometimes i've seen it happen it will with me but i've seen it happen where the chief judge where you use it all and the chief judge says well they don't got any time left sorry we don't hear from them so i'm i'm just putting you on notice i appreciate that your honor why don't we take up where your counsel was because i think that's the important question that we have in front of us submit sure i have this right it seems to me that we're here on a motion to dismiss correct so on a motion to dismiss i have to take the allegations of the complaint is true right in true in part but to the extent the allegations are legal conclusions you do not have to accept those legal conclusions well let's go let's go on a little further i have to give them every intendment of those facts don't i i suppose that's true ok so you read them in the light most most favorable to the extent that they are factual allegations yes and if i look at rocky mountain that was on summary judgment right correct so we're in a little bit different procedural posture in this case that would be correct you know if i look at the allegations in the complaint and this is why i think this is important the allegations say that oregon program imposes no burden on interstate fuel market disputes the law is designed to benefit the in state market participants by awarding them credits that they may thereafter sale to out of state petroleum and etha l companies that oregon has no petroleum industry its law props up the local green fuel industry at the expense of the wider fuel market including out of state petroleum and  ethanol companies those are the allegations so it seems to me giving them now on if you will motion to dismiss the complaint alleges the baucus situation where the state supports the unique local industry of green fuel producers at the expense of others why doesn't it but it doesn't because the complaint refers to a specific regulatory regime in effect incorporating that regulatory regime into the complaint and what it what that regime when it actually does what does that mean i mean i'm supposed to take these allegations as true and i didn't think that any of them were a statement of law or a statement of final but they were just allegations and then i said well let me read baucus and see if it's the same situation seems to me it is oregon is if you will supporting local industry of dual green fuel producers at the expense of the others who have to buy all these credits from the in state people and when they're at that point i'm saying to myself on a motion to dismiss shouldn't i at least give them a chance to go get some discovery together and i certainly have had that discussion with the trial division at the department of justice i would rather this was on a motion for summary judgment why would they supposedly because then i would have more evidence to look at now all i have to do whatever he says as long as it's in the complaint i have to accept to strew i'm not anxious to do that but the law requires me to do it i don't believe you have to accept a legal conclusion and legal pleasure about what i just read what i say let's assume everything judge smith told you is a fact that that as a matter of fact and i don't think it's very i don't think it's disputed by the way i don't think it's disputed that the effect of this statute is to require at least his petroleum clients to buy credits and that there aren't any in state petroleum producers in oregon who have to buy credits and therefore that result so let's in the statute and we can look at them so and don't tell me why if it does the facts that that judge smith just read to you don't state a claim for discrimination now that they're incorporated why this complaint let's assume that the complaint just said instead here's all the regulations and then settle the stuff judge smith said tell me why that complaint wouldn't state a claim for discrimination what the regulation does is it does require gasoline and diesel suppliers who sell in the state of oregon to buy credits they are not required to buy credits from oregon producers and in fact many of the lowest carbon they credits are bought from oregon they're being bought from oregon oregon is receiving all the benefit of this law there is nothing in oregon which gives it a negative there's no in state industry that is negatively impacted or burdened by this law and that means is this legislative abuse or is this just a powerful safeguard and all i'm saying is here we are on motion to dismiss where all they're asking for is the right to go out and discover if they're right or they're wrong and given baucus i'm trying to figure out why i wouldn't allow it and also given our iraqi mountain i mean rocky mountain we did the same thing we said the ethanol purpose in effect claims under the commerce clause to be remanded for the proceedings for the same kind of argument the only reason i cut off the and i didn't do it but the petroleum claims of because it was on summary judgment and there was no evidence left and we said on oh no i don't i'm asking you is why not give that guy that opportunity i would suggest for this reason about that we are in the or he oregon clean fuels program which is effectively incorporated we are much further along than california was at the time that its program was challenge but much yet but but assume and we keep fighting about incorporation and i'm with you on incorporation let's assume that the facts alleged by the way i think the facts alleged are probably true and then if they very plausible i think they're probably undeniable that his clients have got to buy credits in order to do business in oregon but then oregon producers of bio fuels that exist now don't have to buy credits in order to do business and assume those facts tends true does that make out a commerce clause violation no it does not tell me why not because the distinctions are based on science based on the carbon intensity and based on the purpose of the statute in the rule which is over a ten year period to reduce the carbon intensity enhance the greenhouse  w your argument is that the discriminatory effect in reality of this of this regulation doesn't make it unconstitutional because its its purpose is to conduct environmental regulation well not state of oregon without encouraging people to produce nonpolluting fuels and you and i'm not suggesting your position is wrong i just wanted to stand what it is your position is that given the fact that this was a statute designed for environmental protection and given the fact that it's facially neutral the fact that he alleges and that we take is true then in reality it means that out of state petroleum producers will have to buy credits from was what do we do with the statement after statement by the legislators and the governor and the administrative agency which consistently touts not the environmental protection of this law but the way to encourage the development of the oregon green fuel industry well i think that to me that makes it pretty tough if you consider those statements in a vacuum perhaps it does if you consider it in the context of oregon going all the way back thirty years now adopting a number  of statutes a number of studies a number of ways of reducing greenhouse gases for the purpose of reducing greenhouse gases in our contribution to that and look at well yes your honor i think that's fair i think that they're they are in effect both you will not find any state legislator saying i want to adopt an environmental law that's going to absolutely hurt and crush our economy  there are always statements i would submit that that not only is this good for the environment but it will be good for oregon for a number of reasons  interested i guess i started into this because i didn't really get to my last question and it seems to me that these statements where if you will categorize by the district court as out of context not really the way it ought to be not the way it was trying to take the same approach you're giving and again we're on a motion to dismiss i don't know what business the district court had to categorize any of these statements on a motion to dismiss i've got these statements as how legations in the complaint which i'm to take is true i'm not supposed to find out all the reasons they're wrong or all of the reasons why they wouldn't be something which would support the issue i'm to take them as true and to determine whether i can on a motion to dismiss dismiss the case and yet you want to categorize them or you wanted to say dispute them or you want to say all these things about how they don't mean anything but again we're not at trial we're on a motion to dismiss alleged by your opposition and i have to give them the credit to which their do well on and my memory is in ms meccan start may be able to help me remember this my memory is that both statements were actually appended to some of the materials at trial and so the there in the allegations yes they're put they're part of the complaint here there are allegations seventy two through eighty four so so let's assume that a bunch of organ legislators and the governor said one of the things we're trying to do here is develop an in state industry ok let's assume they set that does that make the statute unconstitutional only if it discriminates on the basis against similarly situated so i mean i take it this was the argument your brief and that's why i'm nobody's arguing that the statements were made not the question is whether there is sufficient to plead a case of discrimination that's what we have to decide react correctly and i think that judge smith's questions assume discriminatory purpose but i'm dumb as i'm trying to give them the benefit of being a minimal ssion to dismiss and give them every intendment of what that means i'm not trying to say they're true in fact that's why i just keep saying why don't you guys let us go on have a motion for summary judgment get the evidence out there or even a trial whatever it's going to take so that we can get through this why stop it now when every part of the complaint would suggest this is the back a situation because your honor the case law bad that says that you look to the statute and the regulations themselves to determine what the purpose is and those regulations say that purpose is to reduce carbon intensity and then the regulations fall from that and that's what they actually do that's the purpose and that's the effect and i'd like to see the rest of my time to my colleague thank you very much for your morning your honor is it please the court elaine meccan stocker intervener a california air resources board i know i don't have a lot of time so i'd like to try to make four points and i'll try to do so as quickly as possible first in response to the question about rebranding and how this could be decided on a motion to dismiss i think it's worth noting that on a motion to dismiss this court and the district court can consider material subject to judicial notice and all of the evidence on the purpose claim in rocky mountain was also submitted on judicial notice  minute don't go too far because on the same kind of claim on the same kind of problem all of the ethanol purpose in effect claims under the commerce clause were remained because it was only a motion to dismiss and that was in rocky mount because it was the purpose in effect claims for petroleum and on summary judgment and no more evidence to be taken we didn't do anything we let it be clarification i think it's important your honor is that rocky mountain was up on partial summary judgment and that the district court had not considered the ethanol purpose and effect claims which is why they were reminded to the court to the lower court  didn't say they couldn't be decided as a matter of law we just said they weren't they hadn't been decided that's correct your honor and so they weren't part of the certified judgment that was before this court that's where i was in a different situation here and the evidence that is before this court and was before the district court is that's correct in most in most cases that's so so my question i ask you the same question i ask your colleague assuming those statements were all made which we have to do do they are they sufficient to do them to demonstrate unconstitutionally discriminatory purpose no they aren't why not because what they show at the end as my colleague mentioned there's a long history of oregon addressing this particular problem and transportation emissions are a huge contributor to greenhouse gas emissions so the context  environmental purpose is the real one and those statements are simply statements from legislators hoping that some of the innovation that this regulation is designed to drive will occur in the state of oregon and that is not a discriminatory purpose just a minute if i take those in consideration of the other allegations in the complaint you missed the other allegations in the complaint these statements aren't there by themselves they're there because of the other allegations which are also in the complaint which have nothing to do with how you can categorize them as the district court tried to do or how you might categorize them it only has to do with do they support the allegations of the complaint and giving every in ten min to those which are oregon imposes no burden on interstate on in state fuel the laws designed to benefit the in state market participants oregon has no petroleum industry yes your honor and those facts are actually not like the facts and baucus they're actually like the facts in exxon v maryland in which maryland imposed a significant burden on refiners who were all happened to be outside the state of maryland but left the retail gasoline market available for in state and out of state independent dealers to compete in that retail gasoline market so they excluded the out of state refiners from that market but left the market free for competition from in state and  out of state independent dealers this is exactly the same where as judge hurwitz noted and is in the record there are all of these out of state fuels that have carbon intensity is lower than oregon and also unlike  get i'm going to help you i appreciate it thank you your honor i did want to mention the threshold question which we haven't spent a ton of time talking about today but we we did argue in the district court did find that petroleum and biofuels are not s correct determination by the district court could they fix that if they could allege facts that would support that there is a single market in which petroleum fuels and bio fuels compete then yes they could fix it they haven't offered any at how courts approach this question what the court looks at when defining the relevant market is who are the consumers and what need are they trying to fill in the market and you can see this in tracy at five nineteen u s three zero one we do all that on the  need to allege that there are consumers who go out into a market and choose between biofuels and petroleum based on price and other factors like that but it seems to me that if we're dealing with this in the traditional motion to dismiss standards amend the complaint i think that that would be an option available to this court if they could if he thinks that he can allege i think that's difficult for them because if you look at the statements that his client has made to the u s e p a which are supplemental excerpts of record they  the organ program means to say to people stop using patrol you know it's displacing it's we're not going to we're not going to be using this is much we're going to be using something different and i know that's what you just said but the allegation doesn't say that well the  nations that follow there are well i can look at them and i don't want you to pour your time you know i mean to the point paragraph fifty seven fifty eight and i mean the the whole purpose of this program was to say we want to we want to bolster and state biofuels in a couple of ways one is what we want our our competitors to pay for it with through by by having to buy credits and the other is we want to displace them and in fact you know that's what's been happening and we reflect in the compete against each other in a single market the regulation identifies gasoline and gasoline substitutes and identifies bio identifies diesel and diesel substitutes these products compete against want to know and that makes sense to me but i just i having trouble finding that allegation in those terms and i can point i your argument is that that's the effect of the various allegation absolutely and again it's on a motion to dismiss so this is taken you know with all the inferences in our favor and of course you know if given the opportunity they wanted more than we already provided we could provide it but i think what we've provided is sufficient certainly sufficient under rocky mountain would be harder it would be hard it would it would depend upon how you read rocky mount because in rocky mountain there was a substantial substantial instate producer that was bird substantial if they had a single you know if it was a de minimus kind of producer i think we would still be able to make that kind of claim that would that shouldn't affect the analysis but but here it's quite clear there are no in state petroleum there is no in state diesel there's no in state gasoline the what if just first it for one second on the second issue that hadn't discussed if your manager and we gave them an extra minute ok so the one the one issue in rocky mountain this court decided the question about extraterritoriality under the current commerce clause it did not decide that issue under the federal structure of the constitution thank thank you i didn't i don't want to spend a lot of time but tell me what provision of the constitution well it's in the structure i don't know who understand but if i can if i'm going to channel i guess the answer i give you is a point to the cases the case is the best one that provides this example is b m w versus gore and it says that the constitution has a principles of sovereignty and comedy and in that case the court said that an alabama alabama could not punish b m w s conduct outside of alabama in an effort to deter that conduct outside of alabama now that wasn't based on the commerce clause it was based upon sovereignty and structure and that's the idea the commerce clause itself is toast upon unit you're right but in the m w versus gore way we said was a state couldn't punish conduct that occurred what the court said outside the state under the fourteenth amendment that's right here isn't the isn't the conduct it's being regulated conduct inside the state which is a selling of your product there is a there there is a contact within state but the the point on exit is b m w versus gore there was none at all no there was a contact in state there was a somebody was injured in alabama right a question was where they could be additionally burden that the question here is whether you can be whether you could whether oregon could you know regulate and deter conduct outside it i thank you both for your very good arguments we appreciate them both a tough case really and i appreciate it we appreciate all of you being here and now this case one five three five eight three four is submitted and court is adjourned until tomorrow thank you very much