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“As a result, we conclude that the CPP rules are invalid,� the judges wrote in a , referring to the Climate Protection Program.

Lauren Wirtis, communications officer for the environmental quality department, said officials will continue to work with counsel at the Oregon Department of Justice on how to move forward.

“We consider this an administrative ruling,� Wirtis said. “It doesn’t deter us from ensuring this plan is fully implemented.� She said among the possible options the agency and the justice department are considering are to appeal the case to the Oregon Supreme Court or potentially go through an administrative process to address the procedural problem.

Until then, it’s unclear what will happen with the Climate Protection Program, enacted under the administration of then-Gov. Kate Brown. The Legislature approved funding for the program in 2022 and it was approved in 2021 by the state’s Environmental Quality Commission following more than a year of meetings over rulemaking and public comment. It requires natural gas companies operating in the state to gradually reduce their emissions, getting to 50% reduction by 2035 and 90% by 2050. At least 26% of the reductions will have to come from the natural gas utilities.

Natural gas is almost entirely methane gas, among the most potent climate-warming greenhouse gases, which trap heat in the atmosphere. One-third of global warming is due to human-caused emissions of methane, according to the U.S. Environmental Protection Agency.

Lawyers for the state’s natural gas utilities — NW Natural, Avista Corp. and Cascade Natural Gas Corp. — challenged the Environmental Quality Commission and the Department of Environmental Quality over the 2021 rules.

They said that in the process of imposing state regulations to cap and reduce emissions, the commission failed to submit required disclosures to them and to other entities that hold federal industrial air pollution permits. Those disclosures include a written explanation about why the state is adopting limits that exceed federal rules and an explanation of alternatives to the rules that were considered and why those alternatives were not adopted.

Officials at the environmental quality department said they were disappointed with the court’s ruling but not worried about the future of the program because the judges ruled on an administrative error, not the validity or authority of the state to adopt and enforce the Climate Protection Program.

“The Climate Protection Program is integral to Oregon’s work to reduce greenhouse emissions, address climate change and benefit the most impacted communities,� Wirtis wrote.

David Roy, communications director for NW Natural, said in an email that the company is “pleased� with the court’s decision and that it still intends to “address climate change.�

“We believe in effective climate policy and remain committed to moving toward a low-carbon energy future while safely and reliably serving our customers,� Roy wrote.

Several energy, farm and timber industry groups intervened on behalf of the gas utilities, including the Oregon Farm Bureau, the Oregon Forest and Industries Council and the Alliance of Western Energy Consumers.

Several legal organizations and environmental nonprofits supported the state’s case, including the Portland-based Oregon Environmental Council and the Washington-D.C.-based Natural Resources Defense Council.

In a news release, the groups said the court’s decision was an unfortunate setback, but that the state cannot afford to let it derail the landmark climate regulations.

“We will not stop holding the oil and gas industry accountable for the impact it is having on our lives, our families and our communities,� the groups wrote. “Without swift state action to restore these protections, the court’s decision to invalidate the Climate Protection Program based on a procedural technicality will cause incalculable harm to Oregon families, workers, and local economies, now and in the future.�