The National Petrochemical & Refiners Association (NPRA) filed a legal challenge to California’s Low Carbon Fuel Standard (LCFS) with the US District Court, Eastern District of California, Fresno Division. NPRA was joined in the suit by the American Trucking Associations (ATA); the Center for North American Energy Security, an organization dedicated to the development of oil sands, oil shale and other unconventional resources in North America; and the Consumer Energy Alliance, an organization advocating, among other things, more access to offshore and onshore oil & natural gas.
The California LCFS calls for at least a 10% reduction from 2006 levels in the carbon intensity (measured in gCO2e/MJ) of California’s transportation fuels by 2020. The regulation also levies the calculation of Indirect Land Use Change (ILUC) effects against biofuels, against the opposition of the biofuels industry.(Earlier post.)
The complaint makes a number of charges, including that the California LCFS violates the Commerce Clause and the Supremacy Clause of the United States Constitution. These charges echo those in a complaint against the LCFS filed by two ethanol trade groups—the Renewable Fuels Association (RFA) and Growth Energy—in December 2009. (Earlier post.)
The NPRA complaint claims that the LCFS violates the Commerce Clause because:
It directly regulates interstate and foreign commerce and extraterritorial conduct, including the extraction, production and transport of transportation fuels and fuel feedstocks outside of California.
It imposes substantial burdens on interstate commerce that are excessive in relation to the claimed local benefits.
It discriminates both on its face, and as applied, against transportation fuels and fuel feedstocks imported from outside of California with the intended effect of (i) promoting in-state production of transportation fuels, and (ii) “keep[ing] consumer dollars local by reducing the need to make fuel purchases from beyond [California’s] borders.”
The LCFS violates the Supremacy clause, according to the complaint, because it conflicts with the Energy Policy Act of 2005 (EPAct 2005), Pub. L. No. 109-58, 119 Stat. 594, the Energy Independence and Security Act of 2007 (EISA) §§ 201 et seq., Pub. L. No. 110-140, 121 Stat. 1492, and the federal Renewable Fuels Standard.
Because the carbon intensity metric of fuels within the LCFS accounts not only for a fuel’s physical characteristics, but also the energy necessary to bring the transportation fuel to market in California, chemically identical fuels are assigned different carbon intensities under the LCFS, the complaint notes. By regulating the fuel pathway of transportation fuels—i.e., the manner in which transportation fuels are produced and ultimately reach the California market—the LCFS directly regulates interstate commerce and conduct occurring outside of California, the complaint charges.
California’s LCFS also would have little or no impact on GHG emissions nationwide and would harm our nation’s energy security by discouraging the use of Canadian crude oil—our nation’s largest source of crude—and ethanol produced in the American Midwest. Discouraging the use of North American transportation fuel sources would only create additional, unneeded burdens for California’s consumers and economy, increase our reliance on energy from less stable parts of the world, and weaken our national security. The LCFS is an ineffective tool for reducing GHG emissions. The fuel prohibited from use in California will simply be used elsewhere, which will result in increasing overall GHG emissions as a result of less stringent environmental standards in places those fuels would ultimately be consumed and of increased GHG emissions from increased transportation distances.
— NPRA President Charles T. Drevna
The LCFS would essentially ban imports to California of fuels derived from unconventional sources such as oil sands from Canada, oil shale from the Western US, or domestic coal supplies that can be converted into transportation fuels. Discouraging these fuels will simply increase costs while failing to prevent their export to and consumption by other nations.
—ATA Vice President Rich Moskowitz
Eleven Northeast and Mid-Atlantic states have announced that they are following California in adopting their own LCFS. (Earlier post.)
In response to the lawsuit, Mary Nichols, CARB chairman, issued the following statement:
Their actions are shameful. This is a critical tool to help us break our dependence on fossil fuels. It will protect us from volatile oil prices and provide consumers with cleaner fuels and provide the nation with greater energy security. Our analysis shows that producing alternative fuels under this standard can save consumers as much as $11 billion over the next decade, and that’s in California alone. Instead of fighting us in court, they should be working with us to provide consumers in California and the rest of the nation with the next generation of cleaner fuels.