US appeals court upholds California’s low-carbon fuels standard

A federal appeals court reversed a district court’s finding and ruled that California’s low-carbon fuel standard is constitutional. The standard does not discriminate against out-of-state crude oil nor violate the extraterritorial regulation prohibition in the US Constitution’s Commerce Clause, the US Ninth District Appeals Court said on Sept. 18.

It vacated the lower court’s preliminary injunction and asked it to reconsider whether the standard’s ethanol provisions discriminate in purpose or effect. The American Fuel & Petrochemical Manufacturers Association and the Rocky Mountain Farmers Union were lead plaintiffs in the lawsuit.

AFPM Pres. Charles T. Drevna criticized the appeals court’s decision, saying the district court “explained compellingly” why California’s LCFS violates the US Constitution’s commerce provision.

“Although the LCFS is a California law, its broad reach and intended scope means that implementing the LCFS will have adverse consequences throughout the nation’s fuel refining facilities and supply chain far beyond California’s borders,” Drevna said on Sept. 18. AFPM will evaluate its options regarding further court proceedings in the next few weeks, he indicated.

The appeals court’s ruling also drew fire from the Consumer Energy Alliance, which was a co-plaintiff. “This is bad news for energy consumers,” said Michael Whatley, the group’s executive vice-president.

‘Untested program’

“The court is upholding an untested program that even the [US Environmental Protection Agency] has no plans to pursue,” Whatley maintained. “Study after study has concluded that an LCFS would unnecessarily raise gasoline and diesel prices, leading to significant decline in [gross domestic product].”

Environmental organizations were elated. “This is a great day for public health and the economy of California,” Tim O’Connor, who directs the Environmental Defense Fund’s California Climate Initiatives, said on Sept. 18.

“The court clearly upheld a groundbreaking policy that will protect consumers and the environment by diversifying our fuel mix and providing more choices for a clean energy future,” he observed.

“Today’s victory ensures Californians are given better, cleaner choices at the fuel pump, which is something everyone can support,” noted David Pettit, a senior attorney at the Natural Resources Defense Council.

“This policy will spur American ingenuity to produce cleaner fuels with fewer impacts to our environment,” he said. “The standard is working to reduce pollution while decreasing the state's reliance on oil.”

Contact Nick Snow at nicks@pennwell.com.

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