California Low Carbon Fuel Standards Survive Ninth Circuit Petition for Rehearing

On January 22nd, the Ninth Circuit Court of Appeals declined petitions to reconsider their decision upholding of enforceability of California's Low Carbon Fuel Standard (LCFS).  The petitions were spearheaded by various trade groups and energy groups, including the Rocky Mountain Farmers Union and the American Fuel and Petrochemical Manufacturers, who argued that the LCFS’s strict requirements — which seek to greatly reduce greenhouse gas emissions in the state — discriminate against businesses importing fuel into California from other states.

The LCFS requires all transportation-fuel selling businesses in California to reduce their fuels' "carbon intensity" — a number calculated based upon a fuel's greenhouse gas emissions resulting from its production, distribution and use — by ten percent by the year 2020. Those opposing the LCFS argued under the U.S. Constitution's Commerce Clause that it discriminated against non-California businesses and their fuels because the carbon intensity calculation factors in the added emissions from transporting the out-of-state fuel to California. The consequently higher carbon intensity of out-of-state fuel made it more difficult for the businesses to adapt to the state's emission lowering requirements.

The original complaint against the LCFS was filed in 2009, with a 2011 ruling determining the requirements were discriminatory and thus unconstitutional. That ruling was appealed by the California Air Resources Board, and the Ninth Circuit held last September that the LCFS' requirement were in fact not discriminatory.