Federal District Judge Lawrence J. O’Neill, Eastern District of California, ruled on Thursday that the State of California’s Low Carbon Fuel Standard (LCFS) program is in violation of the Commerce Clause of the US Constitution and issued an injunction prohibiting its enforcement. (Earlier post.) The LCFS intends to reduce, on a full-fuel lifecycle basis, the carbon intensity (CI) of transportation fuels (measured in gCO2e/MJ) used in California by an average of 10% by the year 2020. (Earlier post.)
The Court found that the LCFS discriminates against out-of-state corn-derived ethanol and impermissibly regulates extraterritorial conduct. Judge O’Neill also ruled that California Air Resources Board (ARB) failed to establish that there are no alternative methods to advance its goals of reducing GHG emissions to combat global warming.
|Supremacy and Commerce clauses|
|The Supremacy Clause (Article VI, Paragraph 2) establishes the Constitution, Federal Statutes, and treaties as “the supreme Law of the Land”, mandating that state judges be bound by them, even if state constitutions or laws conflict.|
|The Commerce Clause (Article I, Section 8, Clause 3) gives Congress the power to regulate commerce “with foreign Nations, and among the several States, and with the Indian Tribes”. The application of the Interstate Commerce Clause has been wrangled over in court since the early 1800s.|
The ruling allows ARB to appeal Judge O’Neill’s decision immediately to the US Court of Appeals for the 9th Circuit. RFA and Growth Energy said they will defend the Judge’s decision that the LCFS is unconstitutional in any appeal that may be filed by ARB.
Earlier in December, after the ARB voted to introduce some changes to the LCFS to streamline procedures and clarify language (earlier post), Chairman Mary D. Nichols noted that:
The Low Carbon Fuel Standard is an essential part of California’s program to move away from dirty fuels and toward a clean energy future. These changes streamline the program. They ensure that we accurately account for every gram of carbon released during the extraction and transportation of unrefined fossil fuels, no matter where they come from.
In 2009, the Renewable Fuels Association (RFA) and Growth Energy filed a complaint in Federal District Court in Fresno, California, challenging the constitutionality of the California Low Carbon Fuel Standard (LCFS). The two organizations argued that, as structured, the LCFS violates both the Supremacy Clause and the Commerce Clause of the US Constitution.
They asserted that the LCFS violated the Commerce Clause by seeking to regulate farming and ethanol production practices in other states. The Commerce Clause specifically forbids state laws that discriminate against out-of-state goods and that regulate out-of-state conduct. With its original filing, the groups noted:
The LCFS imposes excessive burdens on the entire domestic ethanol industry while providing no benefit to Californians. In fact, in disadvantaging low-carbon, domestic ethanol, the LCFS denies the people of California a genuine opportunity to clean their air, create jobs, and strengthen their economic and national security. One state cannot dictate policy for all the others, yet that is precisely what California has aimed to do through a poorly conceived and, frankly, unconstitutional LCFS.
In 2010, the National Petrochemical & Refiners Association (NPRA) also filed a legal challenge to California’s Low Carbon Fuel Standard (LCFS) with the US District Court, Eastern District of California, Fresno Division, echoing the complaints of the ethanol groups. 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.